The moderate‐amplitude axisymmetric oscillations of an inviscid liquid shell surrounding an incompressible gas bubble are calculated by a multiple‐time‐scale expansion for initial deformations composed of two‐lobed perturbations of the shell and a displacement of the bubble from the center of mass of the liquid. Two types of small‐amplitude motion are identified and lead to very different nonlinear dynamic interactions, as described by the results valid up to second order in the amplitude of the initial deformation. In the ‘‘bubble mode,’’ the oscillations of the captive bubble and the liquid shell are exactly in phase and the bubble vibrates about its initial eccentric location. The bubble moves toward the center of the drop when the shell is perturbed into a ‘‘sloshing mode’’ of oscillation where both interfaces move out of phase. These results explain the centering of liquid shells observed in several experiments.