In this paper, some conventional and winglet inboard propellers are designed, analyzed and tested under highly loaded conditions. The design objective is to achieve the highest efficiency at a given propeller RPM and target power. A non-linear optimization solver is coupled with the panel method to design the conventional propellers. A robust parameterized geometry definition is given for the winglet propellers, with the flexibility to change the shapes of the winglet, including its location and direction, and its sections’ pitch and camber. The winglet propellers are designed using the SHERPA (Simultaneous Hybrid Exploration that is Robust, Progressive, and Adaptive) algorithm and the performance of each geometry in the optimization process is predicted by the steady RANS (Reynolds-Averaged Navier–Stokes) method with periodic boundary conditions. Both the conventional propellers and winglet propellers are designed under the open water condition and multiple designs are further analyzed by the unsteady RANS method, together with the hull, the rudder, the free surface and an inclined shaft angle. It is found that (i) in the conventional propeller designs, the unsteadiness in propeller-induced forces on the hull reduces with increased distance from the propeller blade tip to the bottom of the hull; (ii) the efficiency of optimized conventional propellers generally decreases with the decrease of propeller diameter; (iii) under the specified design conditions, the blade tips of the optimized winglet propellers exhibit a tendency to bend towards the pressure side of the blade; (iv) when appropriately designed, winglet propellers can attain enhanced efficiency and reduced unsteadiness in propeller-induced forces acting on the hull’s underside, in comparison to conventional propellers of the same overall diameter. Consequently, winglet propellers are good design choices for highly loaded conditions with strict constraints on diameter. Finally, one conventional propeller design and one winglet propeller design are selected to make full-scale prototypes and tested on the water, where the fuel economy of these prototypes is measured and compared with the numerical predictions. The results demonstrate that the winglet design surpasses the optimal conventional propeller design, yielding a 13.2% improvement in fuel economy under light conditions and a 9.3% improvement under heavy conditions. These findings substantiate the advantages of utilizing winglet designs for propellers operating under highly loaded conditions.