The compressible effect of water is a key factor in transient flows. However, it is always neglected in the unsteady simulations for hydraulic machinery. In light of this, the governing equation of the flow is deduced to combine the compressibility of water, and then simulations with compressible and incompressible considerations to the typical unsteady flow phenomenon (Rotor stator interaction) in a pump turbine model are carried out and compared with each other. The results show that water compressibility has great effects on the magnitude and frequency of pressure fluctuation. As the operating condition concerned, the compressibility of water will induce larger pressure fluctuation, which agrees better with measured data. Moreover, the lower frequency component of the pressure signal can only be captured with the combination of water compressibility. It can be concluded that water compressibility is a fatal factor, which cannot be neglected in the unsteady simulations for pump turbines.