Fatigue crack fracture is a common failure mode in structures. For the propeller with initial crack, the hydrodynamic effect cannot be ignored when studying the fatigue crack propagation behavior. Taking the full-size KP505 propeller as the research object, its hydrodynamic performance is simulated and verified. By using the fluid-structure interaction (FSI), the pressure distribution and stress distribution of propeller under different working conditions are analyzed comprehensively, and the position of propeller hot spot stress is obtained. According to the principal stress and its direction of the hot spot stress, the location and orientation of possible macroscopic crack initiation are determined. By using the linear elastic fracture mechanics and finite element method (FEM), the propeller fatigue crack propagation law and life are calculated. The analysis results show that the Forman-Newman-de Koning (FNK) model predicts more complete fatigue crack propagation life than Paris model. The fatigue crack propagation of propeller has two stages, steady propagation stage, and accelerated propagation stage. The crack breaking blade thickness is the dividing point between the two stages. In addition, the effects of the advance coefficient, stress ratio, and initial crack size on the computed results are also analyzed, which provide reference for ship driving and propeller maintenance.