In location management which is one of the key issues in mobile networks, the mobile user location update and the incoming calls behavior significantly affect the network performance. To reduce the signaling load and delay, this paper purposes dynamic location management with caching in hierarchical databases for personal communication networks. The performance analysis of dynamic location management has the complicated problems, since the local update area, namely the paging area, is dynamically changed by the mobile users mobility patterns. We propose an analytical model to analyze the mobility patterns with complexity in practical HLR/VLR architectures. By using the analytical model, we provide formulas for the performance analysis and the overall cost minimization of the proposed scheme. And also, the effect of the caching method on dynamic location management and the performance comparison among the proposed scheme, the existing static scheme, and the dynamic scheme without caching are studied.