An encircling send-receive type pulsed eddy current (PEC) probe is designed for use in aluminum tube inspection. When bare receive coils located away from the exciter were used, the peak time of the signal did not change although the distance from the exciter increased. This is because the magnetic flux from the exciter coil directly affects the receive coil signal. Therefore, in this work, both the exciter and the sensor coils were shielded in order to reduce the influence of direct flux from the exciter coil. Numerical simulation with the designed shielded encircling PEC probe showed the corresponding increase of the peak time as the sensor distance increased. Ferrite and carbon steel shields were compared and results of the ferrite shielding showed a slightly stronger peak value and a quicker peak time than those of the carbon steel shielding. Simulation results showed that the peak value increased as the defect size (such as depth and length) increased regardless of the sensor location. To decide a proper sensor location, the sensitivity of the peak value to defect size variation was investigated and found that the normalized peak value was more sensitive to defect size variation when the sensor was located closer to the exciter.