In special launch scenarios such as armament and aerospace, the scale of the launch system is severely restricted, which causes unstable combustion of propellant. An embedded structure for the small propulsion system driven by solid propellant is proposed to overcome this problem. This study aims to demonstrate the two-phase flow behaviors and launch safety of the combustion chamber with an embedded structure. A two-dimensional two-phase flow model based on the modified two-fluid theory is developed to describe the detailed two-phase flow behaviors in the combustion chamber during launching. Different from most of the existing studies, the constitutive equations determined from actual physical conditions are used to close the system of continuity equations. The numerical results are compared with that of the experiment to verify the accuracy of the numerical model. On this basis, the launch performance of the embedded structure is investigated. The numerical results indicate that the embedded structure facilitates the ignition process and reduces the risk of excessive pressure, but decreases the muzzle velocity at the same time. In addition, the effect of design parameters on launch safety is further investigated. Design parameters directly affect the launch safety, and the selection of reasonable parameters is a useful method for enhancing the launch performance.