This paper aims to investigate the combined effects of working condition and structural parameters of groove texture on the dynamic characteristics, stability and unbalance response of a water-lubricated hydrodynamic bearing–rotor system to avoid instability and excessive vibration of the rotor. The Navier–Stokes equation, standard K-ε model with enhanced wall treatment and Zwart–Gerber–Belamri cavitation model are considered using the commercial software Fluent to calculate the stiffness and damping coefficients of a groove-textured, water-lubricated bearing based on the dynamic mesh method; the critical mass to express the stability and the unbalance response solved by the fourth order Runge–Kutta method of the rotor are calculated based on dynamic equations. The results indicate that shallower and longer groove textures can improve the direct stiffness along the load direction (Formula presented.), weaken the stiffness in the orthogonal direction (Formula presented.), improve stability and decrease the unbalance response amplitude of the water-lubricated bearing–rotor system at a greater rotational speed and smaller eccentricity ratio; however, the impact of grooves on damping parameters is not as great as it is on stiffness—there exists an optimum groove width to achieve a best dynamic performance.