A three-dimensional, multi-passage unsteady numerical study was conducted to enhance the understanding of unsteady flow phenomena in the tip region of highly loaded compressors. The first-stage rotor of a three-stage transonic low-reaction compressor was chosen as the computational model. Three different tip clearance sizes were calculated to demonstrate the effect of the tip clearance dimension on the unsteadiness in the rotor tip region. It was found that the unsteadiness existed at the vicinity of the stall point when the tip clearance size was larger than the design value. The unsteadiness in the tip region appeared as a “multi-passage structure” in the nine-passage unsteady simulation and it propagated along the circumferential direction. Tip leakage vortex breakdown was the source of unsteady flow behavior. Besides, special attention was paid to the difference between the conventional transonic rotor and the low-reaction rotor. The scale of the flow separation downstream of the shock wave was controllable for the low-reaction rotor even at near-stall conditions. The boundary layer would reattach to the blade surface due to local axial acceleration. Finally, attempts were made to study the stall mechanism of the low-reaction rotor.