Radial gap will occur at the spindle–tool holder interface when the spindle rotates at high speed. Therefore, the radial gap will lead to the nonlinear stiffness at the spindle–tool holder connection, and it will have effects on dynamic characteristic of spindle system. In this research, classic elastic theory is adopted to evaluate the nonlinear stiffness at spindle–tool holder interface. Dynamic model of spindle system is established considering the nonlinear stiffness at spindle–tool holder interface. The fourth-order Runge–Kutta method is applied to solve dynamic response of the spindle system. On that basis, effects of drawbar force on dynamic characteristic of the system are investigated. Considering the cutting force, effects of rotational speed on dynamic response of cutter tip are also discussed. The numerical results show that the drawbar force has effects on vibration mode of cutter tip. Chaotic motion will not occur within the range concerned in engineering practice. Considering the cutting force, the motion of cutter tip turns to be chaotic. The proper rotational speed and drawbar force should be chosen to ensure a stable cutting according to the response of cutter tip.