This paper investigates the sensor-based monitoring feasibility of a bottom-set gillnet through time-domain dynamic simulations for various current and wave conditions and failure scenarios. The dimension and design parameters of the bottom-set gillnet were based on an existing model used in Korea, and the measured environmental data were acquired from the southwest coast of Korea and utilized for the dynamic analysis. For efficient numerical modeling of nets, an equivalent net model which uses fewer line elements was considered, and the projected area, wet weight, and axial stiffness were accordingly adjusted. The hydrodynamic forces on the entire gillnet were estimated using a Morison-force model on the instantaneous positions of the net. The designed gillnet provided excellent stretching performance even under low current velocity. The dynamic responses under wave excitations were not significant in operating conditions; however, significant motions were observed in the fishery-prohibition condition. The proposed monitoring system consisted of an accelerometer, tension sensors, and the global positioning system. Numerous line-failure scenarios were simulated, and the proposed monitoring system could effectively detect a specific problem from the combined patterns of sensor signals by a problem-detection algorithm.