Abstract A level-set based sharp-interface immersed boundary method (IBM) was applied with large eddy simulation to simulate the complex flow field around a marine propeller. The wake characteristics under the open-water conditions including velocity, pressure and turbulent kinetic energy were analyzed. Additionally, the comparative analysis of the axial Reynolds stress of the propeller operating beneath incident waves and that under the open-water condition indicates that the nonlinear interaction between waves and wake leads to the increase in Reynolds stress within the radial range of r/D=0.35 to r/D=0.55 in the far-wake region. The obtained numerical simulation results confirmed the feasibility of the IBM for the numerical simulation of complex flows through hydraulic machinery such as propellers.