AUV’s actuators systems are highly affected by external conditions such as incoming flow velocity. The paper aims to estimation of incoming flow velocity based on quasi-steady model of thruster. The work motivation is compensation of incoming flow effect on AUV’s actuators dynamic model for improving actuator control or a velocity estimation in case of velocity sensors absence. The equation for incoming flow velocity estimation is presented. It accounts orientation of thrusters relative to the longitudinal vehicle axis. Thruster parameters identification procedure based on bollard pull tests and marine trials are presented. Comparative results of propulsion-based velocity estimation with DVL data are discussed. Velocity estimation error between methods is less than 0.1 m/s in steady motion and less than 0.2 m/s in transition process.