A surface piercing propeller (SPP) in tunnel has been proposed recently as a new propulsion system for a high speed air cavity ship. The purpose of the present study is to investigate the characteristics of the SPP in tunnel through a series of model tests. A model propulsion system is placed on a dummy body made of Acrylics. The tunnel is divided into two regions by a guide vane extending from the inlet to the center of the propeller shaft. Air has been supplied from an air nozzle placed at the bottom of the dummy body and the changes in propeller performances caused by the air flow are investigated. The measurements are done for open water and in-tunnel conditions, both for fully and partially submerged propeller. The influence of the guide vane configurations on the propeller performance is also studied. The experiments are performed at the variable pressure circulation water channel of Inha University