The dynamic mathematical model of the hydraulic valve actuation system was established. The simulation model was established by Simulink software, and the leakage of annular seal in cam cylinder and valve cylinder was calculated by simulation. The results show that the main leakage of the hydraulic valve actuation system is the shear flow caused by the relative motion between the piston and cylinder, and the leakage is associated with the cam profile. The leakage of valve cylinder is only existed in the lift section and base circle of cam, and the leakage of cam cylinder is only existed in the return section and base circle of cam. Both the leakage of valve cylinder and the leakage of cam cylinder are increased with the increase of engine speed and the seal clearance. The leakage can be reduced by reducing the seal clearance and designing the reasonable cam profile.