Vapor separator is a vital component in liquid-dominated steam field equipment. While various designs exist, the currently employed separator design was not so effective on separation and there is limitation in understanding the fluid behavior within the separator. Challenges arise from the difficulties in predicting the pressure distribution, flow regime and separation efficiency inside the separator vessel. Owing to this complexity, computational fluid dynamics (CFD) simulation of two-phase fluid movement inside a vapor separator was carried out using Cosmos Express software package. The modifications made to the existing vapor separator were done considering the major mechanisms such as gravity separation, inertial separation, centrifugal separation and surface tension force. This paper describes the CFD analysis of a modified vapor separator model. The design modification made in this vapor separator was to increase the efficiency of the system by reducing its drawbacks. The effect of turbulence and pressure drop on the existing vapor separator design was studied while improving their efficiency to 100% and 99.5% in two different designs. The separator efficiency was calculated by injecting water droplets after a converged solution was achieved. Though, pressure drop inside the vapor chamber is higher (1344.91 N m−2) for the first design compared to later having a lower value of 817.68 N m−2. CFD simulation results demonstrated a promising method to optimize the separator design.