We investigate the modulational instability of plane waves in quadratic nonlinear materials with linear and nonlinear quasi-phase-matching gratings. Exact Floquet calculations, confirmed by numerical simulations, show that the periodicity can drastically alter the gain spectrum but never completely removes the instability. The low-frequency part of the gain spectrum is accurately predicted by an averaged theory and disappears for certain gratings. The high-frequency part is related to the inherent gain of the homogeneous non-phase-matched material and is a consistent spectral feature. DOI: 10.1103/PhysRevLett.87.133901 PACS numbers: 42.65.Tg, 42.65.Jx, 42.65.Ky The modulational instability (MI) of waveforms is a fundamental phenomenon in nonlinear media and is closely associated with the concept of self-localized waves, or solitons. Similar to solitons, MI occurs due to an interplay between nonlinear and dispersive or diffractive effects. It involves the exponential growth of weak perturbations through the amplification of sideband frequencies, which causes a destructive modulation of the carrier wave. In nonlinear optics MI may appear as a transverse instability that breaks up a broad optical beam, thereby acting as a precursor for the formation of stable bright spatial solitons [6]. Conversely, the stable propagation of dark solitons relies on the stability of the constant-intensity background and thus requires the absence of MI [7].Here we study optical media with a purely quadratic (x ͑2͒ ) nonlinearity. These materials are of significant technological interest due to their strong and fast cascaded nonlinearities [8], which can support stable bright solitons in all dimensions [9]. Moreover, they provide the most general means of studying nonlinear processes, because varying the phase mismatch between the fundamental and second-harmonic (SH) waves changes the nonlinearity from being distinctly quadratic to effectively cubic. The generality is further enhanced when the properties of the medium are modulated with long-period quasi-phase-matching (QPM) gratings. This periodicity not only allows one to tune the effective mismatch, but it also induces effective cubic nonlinearities [10,11], which may be engineered to different strengths and signs [12].Except in special cases, MI is unavoidable in x ͑2͒ materials. Optical pulses can be stable if the dispersion has opposite sign at the fundamental and SH frequencies [13]. Transverse inhomogeneities, as in x ͑2͒ waveguide arrays [5], and spatial incoherence [14] also eliminate MI. However, coherent cw beams propagating in pure homogeneous x ͑2͒ materials are always unstable [7]. Naturally, a cubic (Kerr) nonlinearity is always present in x ͑2͒ materials, and, if defocusing and sufficiently strong, it may eliminate MI [15]. Unfortunately, the cubic nonlinearity in conventional x ͑2͒ materials is usually focusing, though it may be a factor in the recent observation of apparently stable quadratic optical vortex solitons [16].We consider transverse MI of coherent cw ...