Recently we have presented a theory of unification of gravitational and electromagnetic fields based on the generalization of Newton’s law to include a dynamic term similar to the Lorentz force of electrodynamics[1]. The unification is convincing. The generalization based on similarity of Newton’s law and Coulomb’s law, however, is speculative although reasonable and compelling. In this article, we have presented a derivation of the dynamic term of gravitation based on our newly proposed ether dynamics, which removes the speculative nature of dynamic term and perfects the unification theory. It turns out that the gravitational interaction is transmitted through the space medium ether. An object in ether is in direct contact with the ether, causing it to move like a highly viscous and incompressible fluid. The movement of ether propagates thorough space like a continuous medium, exerting a force on any object in ether.