Due to the design of lightweight, high speed driveline system, the coupled bending and torsional vibration and rotordynamics must be considered to predict vibratory responses more realistically. In the current analysis, a lumped parameter model of the propeller shaft is developed with Timoshenko beam elements, which includes the effect of rotary inertia and shear deformation. The propeller shaft model is then coupled with a hypoid gear pair representation using the component mode synthesis approach. In the proposed formulation, the gyroscopic effect of both the gear and propeller shaft is considered. The simulation results show that the interaction between gear gyroscopic effect and propeller shaft bending flexibility has considerable influence on the gear dynamic mesh responses around bending resonances, whereas the torsional modes still dominate in the overall frequency spectrum. The splitting of bending resonance peaks is observed in the dynamic bearing force spectrums, which indicates that the gyroscopic effect of gear and shaft is not negligible if accurate evaluation of the system responses is desired. This study provides an understanding of the interaction between hypoid gear pair and propeller shaft when gyroscopic effect of the compliant driveline structure is included.