A three-way valve has a multi-port structure with three openings, which allows control of the fluid direction. However, owing to the complicated trim shape of the internal flow, an irregular fluid flow occurs, which hinders precise fluid flow control. In severe cases, cavitation induces mechanical damage owing to abrupt changes in the fluid direction. In this study conducted a computational fluid dynamics (CFD) analysis was performed to estimate the localized cavitation around the bottom plug of the three-way valve. To quantify localized cavitation, the percentage of cavitation (POC) was derived using the vapor volume fraction (VVF). The POC, defined by the cavitation occurrence zone with VVF > 0.5 divided by the volume of the cavitation danger zone, was 34.90%. Cavitation at this POC level could cause mechanical damage; therefore, a size optimization was performed. The lengths of the optimized waist and tail regions of the bottom plug were obtained wherein the POC level decreased by 19.06%. In addition, experiments were conducted using a flow visualization test setup. The experimental results were quantified into the POC employing the image gradients method, and the results were in good agreement with the CFD analysis.