Gear system is usually lubricated to generate an oil film to avoid dry contact at the mesh interface. As the oil film separates the engaging gear teeth, its effect on the transmission error (TE) is opposite to the teeth elasticity. How to consider the combined influence of the oil film and the tooth elasticity on the TE, and further on the dynamic performance of gears, is still not revealed completely. In this paper, a new mesh stiffness (MS) involving the effect from the oil film and the tooth elasticity is defined, and a nonlinear dynamic model of a spur gear system with developed MS and drive-side and back-side contact is proposed. The effect of the oil film on the dynamic responses of the gear pair is revealed by comparing the received results with that from the dry contact situation and the experiment. It is indicated that the oil film will affect the effective MS and dynamic transmission error (DTE) of the gear system, especially under the situation with the light load. For a tip relived gear pair, the dynamic load sharing ratio (DLSR) between teeth pairs changes significantly when the lubrication is considered.