In order to combine the advantages of both the Lagrangian and Eulerian algorithm for a moving boundary, this work presents a two-dimensional axisymmetric computational model in ALE (arbitrary Lagrangian–Eulerian) forms for the gas–solid transient reacting flow with a moving boundary of the interior ballistic process. A two-phase flow model is established to describe the complex physical process based on a modified two-fluid theory, which takes into account gas production, interphase drag, intergranular stress, and heat transfer between two phases. The governing equations are discretized with the TVD-type MUSCL scheme to obtain a second-order accurate numerical method in finite volume form and solved by the semi-implicit method for pressure-linked equations with density corrections. A dynamic self-adapting mesh update method is developed to expand the computational domain for projectile motion and reduce the computational cost. Several verification tests demonstrate the accuracy and reliability of this approach. A pressure-driven projectile case is used to demonstrate the coupling of the moving projectile with gas dynamics. The application on a real gun shows an excellent agreement between numerical simulation and experimental measurements. Numerical results provide a deeper understanding of the interior ballistic process, including gas production, flame spreading, and pressure wave developing, etc. By applying the ALE technique to two-phase reactive flows with moving boundary, it is be able to take advantage of the best aspects of both Lagrangian and Eulerian approaches. This new method is reliable as a predictive tool for the study of the physical phenomenon and can therefore be used as an assessment tool for future interior ballistics studies.