Abstract The Tesla compressor is an innovative technology that offers a unique approach to fluid compression. Unlike traditional compressors that use rotating blades, bladeless compressors utilize closely spaced disks to create compression. The purpose of this article is to design a prototype Tesla air compressor with optimal design parameters and investigate the performance and loss characteristics based on numerical analysis and experimental demonstration. The prototype model has been numerically investigated at different rotational speeds, and the results have been compared with those obtained in experiments. Computational fluid dynamics (CFD) simulations indicate that the rotor-only efficiency is greater than 90% at very low mass flowrates, while the coupling of the rotor and volute leads to a total-to-static efficiency of approximately 58% (without losses) at 14 g/s. At a nominal mass flow of 4 g/s, the highest total-to-static pressure ratio would be around 1.27. Experimental results indicate leakage losses greatly reduce net mass flow, while pressure ratio values are in good agreement with CFD predictions. During this experiment, a maximum isentropic efficiency of 32.4% is measured. Indeed, the prototype included ventilation and leakage losses, which were not modeled in the CFD analysis. It is remarkable that the compressor does not show any unstable behavior down to zero mass flow (closed valve test), where the CFD and the experiment show consistent pressure ratios. An estimation of the losses from end-wall friction and leakage flow is carried out using numerical simulations at different exit radial clearances. Increasing radial clearance results in an increase in leakage and end-wall power loss, the latter being driven mainly by the axial clearance with the casing, which remained unchanged. To minimize leakage, a Teflon ring has been used as a first measure. Numerical calculations have indicated that the leakage rate is approximately 6 g/s at design speed. A brush seal-type solution can improve the sealing system to reduce leakage.