The impact of internal corrosion and rust formation in water transmission pipes is very important for hydraulic properties, flow structure, and energy losses. The current work analyzes streamlines, velocity distribution, vortex generation, and pressure coefficient changes as functions of varying degrees of internal corrosion in water transmission pipes using Computational Fluid Dynamics (CFD). CFD simulations were performed for different corrosion cases characterized by varying levels of area reduction. The Reynolds-Averaged Navier–Stokes (RANS) equations were solved in ANSYS Fluent using the finite volume method, and the Renormalization Group (RNG) k-ε turbulence model was used to account for turbulence and separated flow phenomena. Structured quadrilateral grid generation was performed in Gambit, and local grid refinement near walls and contraction areas was applied to enhance the accuracy of CFD computations. Good agreement between the CFD results and the experimental data of Eaton and Johnson on turbulent flow through a sudden expansion was obtained. From the findings, it is clear that an increase in corrosion intensity accelerates fluid flow in regions of constriction, creating high velocity and negative pressure gradients in downstream areas following the corroded parts. In addition, high levels of corrosion lead to flow separation, vortex formation, and extensive recirculation, resulting in greater hydraulic losses and pressure drop in the pipe system. From the pressure coefficient distribution plot, it is clear that severe corrosion leads to higher pressure drops in the pipe due to increased turbulence and energy losses.