Numerical calculations were performed to investigate unsteady features of tip clearance leakage flow in an axial compressor. The first stage rotor of a low speed axial compressor with a large tip clearance was examined. It was confirmed that the numerically calculated performance data were in good agreement with the experimentally measured performance data. Using frequency analysis, the flow characteristic near the casing induced by tip clearance leakage flow was found to be not associated with the rotating speed of the rotor. This characteristic is called rotating instability or self-induced unsteadiness. We found that the circumferential length scale of the rotating instability of the compressor was longer than a pitch of a blade passage; therefore, a multi-blade passage was adopted to study the flow structure more precisely. The flow characteristic was described by the frequency, the circumferential length, and the phase velocity, and was changed by operating points toward stall. The behavior of the flow was characterized by circumferentially traveling waves. Hence, the mechanism governing the development of the unsteady feature was further examined in terms of the rotating wave pattern of the pressure distribution. Furthermore, the unsteady feature of the tip clearance leakage flow affected the prediction of compressor performance by altering blockage, flow turning, and loss near the casing.