Cavitation is one of the fundamental phenomena in fluid mechanics. This phenomenon can be observed in fluids in an acoustic field. Cavitation is essentially a “multi-scale and multi-process” phenomenon. In this thesis, we investigate the dynamic aspect of the nucleation–growth, shrinkage and collapse process using dissipative particle dynamics (DPD) simulations. Dissipative particle dynamics (DPD) is a mesoscopic simulation method that can be used to simulate the behavior of fluids. In DPD, a coarse graining is employed at the molecular level to discard the excessive detail at smaller length and time scales. Hence, each DPD particle implies a cluster of real molecules, which allows one to study of larger-scale systems for longer times as compared to purely atomistic simulations such as Molecular Dynamics (MD). The method has proven to be useful in the simulation of complex liquids such as polymer suspensions, colloids and surfactants. However It is important that the coarse-grained mesoscopic model be able to provide properly the thermodynamic and hydrodynamic properties of a real system beyond certain length and time scales. On the other hand, some of the observed phenomena may have a purely thermodynamic origin due to the modification of equations of state. For example, the prediction of thermodynamic properties for metastable liquid is important in the research on liquid structure and phase transition. So it seems to be necessary to consider the thermodynamic properties of fluid during the simulation. Furthermore, accurately matching the phase behavior of a model system, a static property, to that of a real fluid allows one to focus on the dynamical aspects during the study of the phase separation and provides the links to reality necessary for quantitative simulation. Therefore, the ability to specify beforehand the thermodynamic behavior of coarsegrained systems is an important point. Unfortunately, the conventional DPD method is not flexible enough to correctly reproduce the thermodynamic behavior of a real system. Owing the soft interaction forces in the method, the DPD EOS has rigid quadratic density which is quite different from the EOS of a real fluid. To overcome this problem many-body’ DPD method invented by Pagonabarraga and Frenkel. They assume that the conservative force depends on the instantaneous local particle density which allows one to obtain a much wider range of possibilities for the EOS. Also, Trofimov investigated multibody DPD (MDPD) which they improved the thermodynamic consistency by employing different density calculation schemes. Thus improved MDPD method obtained. In this work, we have developed improved MDPD in which the standard DPD model combined as a long-range attractive force with improved MDPD conservative force. This form of conservative Force based on different influence ranges for attractive and repulsive forces is similar in concept to the model proposed by Warren. The combination of repulsive behavior within short range and attractive behavior for long range reflects the microscopic physical origins of coexisting (liquid and gas) phases in single component fluids. By examining our model on the coarse-grained Lennard-Jones fluid below the critical point we have shown that the new model enable one to imitate the behavior of realistic equations of state "within" the two-phase region for a single component system. Finally, the application to vapor-liquid equilibrium problems is illustrated by simulation of a liquid under tension and formation of bubbles. we observed that a good agreement with the theoretical prediction of Rayleigh-Plesset equations for the growth and collapse process is achieved. Key Words: Dissipative Particle Dynamics, Cavitation, bubble nuclei, two phase region