A new co-rotating electrochemical machining method is presented to machine the complex structure inside annular parts such as flame tubes and aero-engine casings. Due to the unique shape and motion of electrodes, it is difficult to accurately compute the electric field intensity in the machining area. In this paper, the complex electric field model is simplified by conformal transformation, and the analytical solution of electric field intensity is exactly calculated. A material removal model is built on the basis of the electric field model, and the dynamic simulation of the material removal process is realized. The effects of the cathode radius, applied voltage, feed rate and initial interelectrode gap on the interelectrode gap (IEG) and material removal rate (MRR) are analyzed. The simulation results indicate that the MRR is always slightly less than the feed rate in a quasi-equilibrium state, resulting in a slow reduction in IEG. In addition, the final machining state is not affected by the initial IEG, and the MRR in a quasi-equilibrium state is determined by the feed rate. Several comparative experiments were carried out using the optimized processing parameters, in which the MRR and IEG were measured. The convex structures were successfully machined inside the annular workpiece with optimum machining parameters. The experimental results are in good agreement with the theoretical results, indicating that the established model can effectively predict the evolution process of MRR and IEG.