This paper deals with a theoretical instability analysis of a rotating flexible disk subjected to swirling fluid flow in a confined fluid, and a influence of dissipative effect (structual damping, fluid viscosity and fluid friction) on the dynamic instability of the rotating flexible disk. The aim of this paper is to demonstrate the important effect of dissipation on the dynamic instability. In the instability analysis, the basic equations of swirling fluid flow around the rotating disk are derived by integrating Navier-Storkes equations over the gap width between the rotating disk wall and the shroud wall. The structural vibration equation of the rotating flexible disk is based on the Kirchhoff-Love plate model. The equations of coupled fluid-structure motion take into account the moving boundary conditions with respect to both the rotating disk and the fluid flow. The calculated results show that the dissipative effects play a key role in governing the threshold of dynamic (flutter) instability, and a influence of dissipative effect on the dynamic instability.