It is important to monitor the occurrence of cavitation in machines as it may damage them. Sensing technologies are used to monitor the occurrence of cavitation, but the mechanism of cavitation needs to be understood to implement appropriate sensing technologies at exact locations of machines. Therefore, a new simplified model was proposed and used with ANSYS Fluent to investigate how cavitation occurs in a gear pump. The model considers a transient state with a time step of as small as 2.5 × 10−6 s. In the model, the volume fraction and mixture properties were added to the continuity and momentum equations. Using the newly established model, a simulation was conducted to find the related parameters. Combinations of different numbers of modules and gear teeth were considered to observe the dynamic pressure distribution in the vicinity of gears to determine the locations of cavitation. The pressure was found to be high as 12.3 MPa in the oil-trapped area, and large pressure fluctuations of the outlet of the gear pump occurred when the oil-trapped pressure was released. The existence of cavitation during the operation of the gear pump was predicted by locating low-pressure areas. The amount of cavitation decreases when the flow rate of the pump increases with the increase in turbulence dynamic energy at saturated vapor pressure.