Localized defects are common in gear transmission systems and can sometimes cause serious production problems or even catastrophic accidents. To reveal the failure mechanisms and study the localized defects in gear transmission systems, a 24-degree-of-freedom (DOF) dynamic coupling model is proposed considering shafts, bearings, and gears. The dynamic characteristics of the established model when defects appear on the raceways of bearings and surfaces of gears are analyzed. It can be found in the results that the response of the established model produces periodic shocks when localized defects appear on bearings or gears through numerical analysis. Sidebands generated by fault frequencies can be detected from the frequency spectrum. Especially, bearing-localized defects on the inner race and gear surface are similar in modulation form envelope analysis, and the increase in rotating frequency leads to difficulties in distinguishing defects on bearings and gears. The established coupling dynamic model was validated through experimentation and offers a theoretical basis for the fault diagnosis of gear transmission systems.