Large scale dynamics of the oceans and the atmosphere are governed by the primitive equations (PEs). It is well-known that the three-dimensional viscous PEs is globally well-posed in Sobolev spaces. On the other hand, the inviscid PEs without rotation is known to be ill-posed in Sobolev spaces, and its smooth solutions can form singularity in finite time. In this paper, we extend the above results in the presence of rotation. First, we construct finite-time blowup solutions to the inviscid PEs with rotation, and establish that the inviscid PEs with rotation is ill-posed in Sobolev spaces in the sense that its perturbation around a certain steady state background flow is both linearly and nonlinearly ill-posed in Sobolev spaces. Its linear instability is of the Kelvin-Helmholtz type similar to the one appears in the context of vortex sheets problem. This implies that the inviscid PEs is also linearly ill-posed in Gevrey class of order $s>1$, and suggests that a suitable space for the well-posedness is Gevrey class of order $s=1$, which is exactly the space of analytic functions.