We use N-body/hydrodynamic simulations of collapsing rich galaxy groups to predict X-ray properties of compact groups. The model is consistent with the X-ray observations of a few compact groups and naturally explains the correlation between the spiral fraction and the velocity dispersion and crossing time observed in compact groups. The model predicts a correlation between X-ray luminosity and gas temperature only if the systems are bound. The model is an extension of the one used by Diaferio et at. [AJ, 107,868(1994)] to show that substructures within collapsing rich loose groups have dynamical properties and a multiplicity function similar to the Hickson compact groups. So far, both X-ray and optical results suggest that most observed compact groups are three- dimensional systems rather than chance alignments of unrelated galaxies. We propose some direct observational tests to discriminate among models.