Investigations of shock-induced cavitation within a droplet are highly challenged by the multiphase nature of the mechanisms involved. Within the context of heterogeneous nucleation, we introduce a thermodynamically well-posed multiphase numerical model accounting for phase compression and expansion, which relies on a finite pressure-relaxation rate formulation. We simulate (i) the spherical collapse of a bubble in a free field, (ii) the interaction of a cylindrical water droplet with a planar shock wave, and (iii) the high-speed impact of a gelatin droplet onto a solid surface. The determination of the finite pressure-relaxation rate is done by comparing the numerical results with the Keller–Miksis model, and the corresponding experiments of Sembian et al. and Field et al., respectively. For the latter two, the pressure-relaxation rate is found to be [Formula: see text] and [Formula: see text], respectively. Upon the validation of the determined pressure-relaxation rate, we run parametric simulations to elucidate the critical Mach number from which cavitation is likely to occur. Complementing simulations with a geometrical acoustic model, we provide a phenomenological description of the shock-induced cavitation within a droplet, as well as a discussion on the bubble-cloud growth effect on the droplet flow field. The usual prediction of the bubble cloud center, given in the literature, is eventually modified to account for the expansion wave magnitude.