The present work aims at exploring the stabilization mechanism of detonation propagating in a supersonic expanding channel with inflow velocity gradients. To achieve this, two-dimensional numerical simulations of a stoichiometric hydrogen–oxygen mixture are performed by solving the Navier–Stokes equations with a one-step two-species reaction model. A hybrid sixth-order weighted essentially non-oscillatory centered difference scheme is utilized to solve the governing equations. The results show that the detonation wave reaches a dynamic stabilization in a supersonic expanding channel affected by the inflow velocity gradients. By contrast, the detonation wave fails to self-sustain propagation in the channel with uniform inlet velocity for the same average velocity, highlighting the significant role of inlet velocity gradients in controlling the propagation and attenuation of detonation waves in confined channels. The mechanism of the dynamic detonation stabilization with the inflow velocity gradients is related to the compression of the flow field by large-scale unburned jets and the interactions of transverse waves and shear layers, which are conducive to improving the pressure and combustion rate of the unburned gases behind the detonation wave. Additionally, to a certain extent, the larger the inflow velocity gradient, the easier it is for the detonation wave to achieve dynamic stabilization at a certain position in the expanding channel.