This paper investigates the influence of a fiber optic cable inserted into a straight steel pipeline on pressure oscillations occurring during the rapid water hammer phenomenon. In order to numerically simulate water hammer in the pipeline with an inserted cable, a one-dimensional model with variable pressure wave speeds was used. The required smoothing of the pressure wave was obtained by introducing a diffusion coefficient into the momentum equation. Transient equations were solved using a modified finite-element method. The numerical model was calibrated with the dissipation coefficient based on the results of our own experimental tests. In the experimental study, four different types of cables and three values of initial flow rates have been considered. The obtained values of the calibrated dissipation coefficient are directly proportional to the initial water flow velocity. The results demonstrate that this approach allows one to reproduce the damping of pressure oscillations accurately and to obtain satisfactory results compared to experimental data for a given range of volumetric flow rates.