Numerical investigations were conducted to predict the performance of a transonic axial compressor rotor with circumferential groove casing treatment. The Notre Dame Transonic Axial Compressor (ND-TAC) was simulated at Tsinghua University with an in-house computational fluid dynamics (CFD) code (NSAWET) for this work. Experimental data from the ND-TAC were used to define the geometry, boundary conditions, and data sampling method for the numerical simulation. These efforts, combined with several unique simulation approaches, such as nonmatched grid boundary technology to treat the periodic boundaries and interfaces between groove grids and the passage grid, resulted in good agreement between the numerical and experimental results for overall compressor performance and radial profiles of exit total pressure. Efforts were made to study blade level flow mechanisms to determine how the casing treatment impacts the compressor's stall margin and performance. The flow structures in the passage, the tip gap, and the grooves as well as their mutual interactions were plotted and analyzed. The flow and momentum transport across the tip gap in the smooth wall and the casing treatment configurations were quantitatively compared.