Underwater explosion can occur in many practical applications such as hydro-forming and damage estimation of explosive material near submerge structures. The aim of this study is to develop a numerical procedure for simulating a simplified mathematical model of such phenomenon. The Euler set of equations are selected as governing equations and the ideal gas and Tait equations of state are used to obtain pressure for the gas bubble and the surrounding water zone, respectively. Meanwhile, the modified Schmidt EOS is used to simulate the cavitation regions. An ALE method is used to integrate governing equations over an unstructured moving grid. This method prevents the grid distortion by extending the gas-liquid interface grid velocity to the neighboring grid nodes by a smoothing operator.A mesh adapting technique is applied to increase the accuracy, also for better capturing of flow physics. This is performed by refinning the grid in regions where gradients are higher than a known upper threshold and vice versa. The and criteria are used to determine the regions which need to be refined or coarsened, whereas denotes the pressure of the element center. Moreover, a least square smoother is employed to moderate the undesirable effects of numerical instabilities.