<p>This paper focuses on the issue of accuracy degradation when directly constructing a reduced-order model (ROM) using dynamic mode decomposition for a volume of fluid (VOF) field of two-phase flow simulations, and proposes a improved method that utilizes the signed distance function (SDF), also known as the level set function, with respect to the gas–liquid interface. The effectiveness of the proposed method was demonstrated by applying it to sloshing tank problems under two different conditions. The oscillation modes were observed to appear only near the interface when using the VOF field directly; however, the influence of the interface is alleviated over a larger distance, resulting in smoother oscillation and improved performance of the ROM when employing the level set function. The results show that ROM for a level set function in cases with small oscillation was shown to be effectively equivalent to that for one-dimensionalized interface. Moreover, the ROM of the level set function could reproduce the physics of this phenomenon with higher accuracy than that of the VOF fields in the cases where one dimensionalization is not possible, such as when the liquid inside the tank surges and climbs up to the ceiling.</p>