When the electric locomotive pantograph is dropping, the interruption of pantograph catenary contact causes electromagnetic oscillation and arcing. The frequent arc burning that occurs due to charge accumulation results in the amplitude of overvoltage increasing gradually, posing a threat to locomotive high-voltage equipment. However, the physical mechanisms and characteristics of overvoltage are still unclear. This paper proposes a simulation model of operating overvoltage due to a dropping pantograph based on the pantograph–catenary arc and variable capacitance. Distributed RLC electromagnetic oscillation is considered, which allows the real-time calculation of arc resistance and capacitance. Under the same working conditions, the error between the simulation and test results is less than 4.0%, which proves the credibility of the model. The variation law of overvoltage under different dropping speeds or catenary phases was investigated, which shows the max amplitude is 298.20 kV and steepness is 2096.80 kV/μs at 0.30 m/s speed. The waveform shows the characteristics of high amplitude and high steepness, similar to very fast transient overvoltage (VFTO). There is a sinusoidal relationship between the catenary phase and overvoltage amplitude. The closer the catenary phase to 90°, the higher the overvoltage amplitude. The research has important guiding significance for the overvoltage formation mechanism of a traction power supply system and the insulation coordination design of high-voltage equipment.