Steam ejectors are a promising energy-saving technology. Therefore, enhancing their relatively low entrainment performance is essential for expanding their industrial applications. In the present study, a novel ejector design, in which an annular cavity bypass is used in the primary nozzle, has been proposed to improve the entrainment performance of steam ejectors. CFD simulations by ANSYS Fluent 2020R2 are conducted on the proposed steam ejector to investigate the influence of bypass-related geometric parameters (position, width, and divergence angles before and after the bypass) on its entrainment performance under constant operating conditions. The main finding in the present study is that the proposed ejector performs better than the conventional ejector, where the proposed ejector achieves a maximum enhancement of 10.4% in entrainment performance and 4.5% in critical back pressure. The parametric study shows that the best values for the bypass position (ψ), width (δ), and divergence angles after bypass (θ) and before bypass (β) are 0.54, 0.146, 7.1°, and 7.6°, respectively. Moreover, the bypass position has the most significant contribution to the entrainment performance improvement, followed by the divergence angle before the bypass. While the divergence angle after the bypass has a minimal effect on the ejector performance and the bypass width demonstrates an insignificant impact.