Abstract: The unsteady flow field around a ducted propeller configuration has been numerically simulated by solving compressible Euler equations based on unstructured overset grids, and the effects of the tip clearance, the propeller location and the duct diffuser included angle are investigated. The computational domain is divided into two overlapping subzones: a rotational one and a stationary one. The rotational subzone contains the blades and the rotating hub, while the stationary subzone contains the duct and a part of stationary hub. The method of overset grids is used to simulate the relative motion between the blades and the duct, and the detailed flow field around the propeller is obtained. The calculated results have a good agreement with the experimental data, and the results show that performance of the ductedpropeller improves while reducing the tip clearance or reasonably moving the propeller backwards or increasing the duct diffuser included angle.