This paper presents a dynamic model of a virtual air gap variable reactor (VGR). In contrast to traditionally mechanically operated variable reactors, which have been used as arc suppression coils in compensated networks for centuries, VGRs have shown an enhanced response speed. However, the harmonics created by VGRs are considerably higher than those created by mechanically operated reactors. This study’s dynamic model considers the magnetic saturation behavior of VGRs, enabling a detailed examination of VGRs. Furthermore, the model can be utilized to develop an effective controller for a VGR. A VGR prototype has been used to validate the dynamic model. It is shown that the dynamic model replicates the actual behavior of a VGR well.