In order to meet the requirements of automobile engines and marine-use diesel engines, turbochargers must be developed with high boost pressure and appreciably high levels of efficiency. The high pressure rise typically achieved in transonic compressors lead to a stage characterized by high inlet relative Mach numbers. Losses generated in transonic compressors are to a large extent due to the formation of shockwaves at the inducer with interactions between the shock, tip leakage vortex and boundary layer. Significant efficiency reduction occurs at the tip region of the impeller due to the complex interaction of the tip clearance flow and shocks, resulting in significant overall performance degradation. A study has been conducted on the unsteady motion of shockwaves in a transonic centrifugal compressor with vaned diffuser using time-resolved three-dimensional Reynolds average Navier-Stokes simulation. Focus is placed on the impact of the shock motion and post shock unsteadiness on stage performance and impeller-diffuser interaction. The key findings were that the interaction of the shockwave with the tip leakage flow and the boundary layer were the most influential in loss generation with a consequence of increased aerodynamic loss. For the unsteady blade row interaction, the influence of upstream flow unsteadiness on diffuser vanes had significant effect on the flow incidence angle. Periodic jet and wake structure from the impeller and the progressive pressure waves which interacts with the vanes at the interface strongly determines the intensity and position of the vane shock. This has implications on performance in terms of stall inception and static pressure rise across the diffuser.