An enhanced hypoid gear mesh model that incorporates the Hertzian impact damping function is developed in this study to reveal the mechanisms of damping during gear mesh. Two types of impact damping models, namely, viscous and nonviscous type based on the first principle of mechanics, are compared to previous empirical damping models with a constant damping coefficient. Parametric studies are performed for both steady-state and transient analyses to investigate the impact damping effect under numerous load conditions or physical parameters of a meshing gear pair. Comparative study between viscous and nonviscous damping models is also performed to examine their effects on dynamic response for various load levels. It is shown that impact damping can significantly reduce the amplitude of the dynamic mesh force. Nonviscous damping has more significant effect on the dynamic response under heavy torque load due to the influence of greater elastic deformation. Furthermore, it is observed that impact damping can turn double-sided impact into single-sided impact and suppress response peaks in a certain mesh frequency range during speed ramp up.