This paper is presented the interaction between propeller and rudder at different operating conditions by using ANSYS-Fluent software. A moving reference frame (MRF) method is applied and the flow equations are solved using Reynolds-Averaged Navier-Stokes (RANS) method and the K-Ï SST turbulent model. The propeller is selected VP1304 and rudder is spade type with NACA0015 section. Hydrodynamic characteristics of the propeller with and without rudder, effect of rudder on the propeller performance, rudder lift and drag, pressure and velocity contour are presented discussed. The results show that the rudder effect on the propeller is small while the propeller on the lift and drag of the rudder may be significant.