The first stage of a transonic multi-stage mixedflow compressor is numerically studied with and without casing treatment. First, overall performance and behavior of the tip leakage flow are investigated in the compressor stage with a smooth casing. Performance problems emerge in terms of narrow operating range and mismatching between rotor and stator. By investigating the flow field near tip region in detail, remarkable low momentum regions are observed at front and rear portion of rotor passage near suction surface, which grow up and extend further upstream along with mass flow reduced to near stall point, which contributes to a narrow stall margin. Detailed analysis indicates that tip leakage vortex and two types of leakage flow with different flow behaviors are main causes of low momentum regions. Shock-leakage flow interaction and vortex breakdown play an important role in formation of these regions. To improve the flow field near the rotor tip and extend the stable operating range, a circumferential groove casing treatment is then adopted, starting from 10% and ending at 94% axial chord. As expected, the low momentum regions are largely diminished by the casing treatment and stall margin of the investigated compressor stage is effectively enhanced. Fluid from circumferential grooves is injected into blade passage near the suction surface and re-energizes the leakage flow, which makes mainly contribution to manipulation of tip leakage flow and stall margin improvement. Since the pressure difference across blade tip section has a great impact on effectiveness of circumferential grooves, the positions of shock wave and tip leakage flow as well as where the interaction takes place ought to be taken into account through the casing treatment design procedure.