A lateral inlet direct-operated pressure regulator is a novel device for microirrigation system that ensures the equal operating pressure of the lateral inlet required for high uniformity. This study develops a computational fluid dynamics (CFD) model in combination with inlet pressure and regulation assembly displacement to analyze the outlet pressure of the pressure regulator. The model is validated by a comparison of experimental measurements, and the predicted results show good agreement. The effects of the regulation assembly displacement and geometrical structure (regulation assembly inlet height) on regulating performance are investigated. Results show that the magnitude of the regulation assembly movement affecting by inlet pressure, preset pressure, and flow rate significantly changes in the beginning of the regulation range and then changes slowly. The spring parameters can be designed according to the force–displacement characteristic (the F–Lv curve) of the T-shape regulating plunger. A greater regulation assembly inlet height corresponds to a lower preset pressure and less sensitivity of pressure loss to the movement of the regulation assembly. The pressure distribution through the regulator provides an improved understanding of the pressure difference in the regulating plunger with various displacements. The CFD model can reflect the motion characteristics of the regulation assembly and reveal the key factor of the regulator design. The results form the sound basis for future design and performance optimization of pressure regulator.