In recent years, computational fluid dynamics (CFD) has been widely used in calculating flow characteristics and heat-flow coupling. However, heat generated during fluid transportation is always ignored and the density and viscosity of the working medium are supposed to be constant. In this article, heat generation was taken into consideration. Accordingly, the thermophysical properties working of the medium are variable. A typical rotor-stator fluid machine, a hydraulic retarder, was chosen to investigate the relationship between the heat transfer characteristics of the fluid and the braking torque. The conclusions were obtained by analyzing the flow conditions which involved Re, vorticity, and rothalpy in the flow passage and viscous dissipation. When the viscous dissipation generated heat in the passage, temperature was increased and viscosity was decreased, thus accelerating the development of turbulence. Moreover, Re was increased at the same time. Furthermore, the dissipation of vorticity was reduced constantly and rothalpy reduced. The braking torque was decreased finally because the wall shear stress was decreased. The conclusions in this article are of practical significance for forecasting other turbomachine characteristics.