In a nuclear power plant, the fuel assembly, which is composed of fuel rods, burns, and the high temperature can generate power. The fuel rod consists of pellets and a cladding that covers the pellets. It is important to understand the pellet-cladding mechanical interaction with regard to nuclear safety. This paper proposes simulation of the PCMI. The gap between the pellets and the cladding, and the contact pressure are very important for conducting thermal analysis. Since the gap conductance is not known, it has to be determined by a suitable method. This paper suggests a solution. In this study, finite element (FE) contact analysis is conducted considering thermal expansion of the pellets. As the contact causes plastic deformation, this aspect is considered in the analysis. A 3D FE module is developed to analyze the PCMI using FORTRAN 90. The plastic deformation due to the contact between the pellets and the cladding is the major physical phenomenon. The simple analytical solution of a cylinder is proposed and compared with the fuel rod performance code results.