A two-dimensional numerical method for inviscid two-fluid flows with evolution of density interface is developed, and an initially stationary two-dimensional fluid sheet surrounded by another fluid is studied. The interface between two fluids is modeled as a vortex sheet, and the flow field with the evolution of interface is solved by using vortex-in-cell/front-tracking method. The edge of the sheet is pulled back into the sheet due to surface tension and a blob is formed at the edge. This blob and fluid sheet are connected by a thin neck. In the inviscid limit, such process of the blob and neck formation is examined in detail and their kinematic characteristics are summarized with dimensionless parameters. The edge recedes at and the capillary wave propagating into the fluid sheet must be considered for better understanding of the edge receding.