The space–time CESE method has been used to simulate phase transition of water vapor in compressible flows. The governing equations consists 1-D Euler equations and four equations from the method of moments of the size distribution function, which deal with the homogeneous condensation or evaporation. The source terms due to the phase transition are integrated in time either explicitly by operator splitting technique or implicitly by iterating procedure. Numerical method is validated by comparing with experimental data for homogeneous condensation in an unsteady rarefaction wave. Influence of different treatments of source terms is evaluated as well. Phase transition including both condensation and evaporation in a closed shock tube is then demonstrated. Compared with the numerical method of ASCE2D, the present method has a higher resolution for weak disturbances and a better description of the effect of phase transition.