To comprehensively understand the dynamic behavior of muzzle bubbles during underwater launching, an emptying process aligned with the muzzle flow characteristics is established and an evaporative condensation mechanism is modeled according to the high temperature and pressure properties of the propellant gas. Utilizing the spherical bubble theory, which comprises the inflation process and evaporative condensation effects, the dynamics of muzzle bubbles and their corresponding pressure waves are investigated. The numerical simulation results well agree with the experimental observations in terms of bubble radius and near-field pressure waves. Furthermore, the influence of two key factors on the bubble dynamics is examined: underwater launching depth and initial muzzle pressures. The results illustrate that the inflation process needs to be accurately described for precise pressure wave predictions. Using the evaporation condensation model, the bubble radius and frequency can be accurately characterized. Moreover, the launching depth influences the free expansion radius and oscillation frequency mostly due to the increase in hydrostatic pressure, which decreases by 33% and increases by 150% in the 1–20 m range, respectively. The initial muzzle pressure affects the initial expansion velocity and initial shock wave mainly due to the increase in the mass flow rate, which increase by 56% and 82% in the 35–65 MPa range, respectively.