With the increase of ship size and speed, the loading on the propeller is increasing, which in turn increases the rotational speed in the propeller slipstream. The rudder placed in the propeller slip stream is therefore subject to severe cavitation with the increased angle of attack due to the increased rotational induction speed of the propeller. In the present paper the surface panel method, which has been proved useful in predicting the sheet cavitation on the propeller blade, is applied to solve the cavity boundary value problem on the rudder. The problem is then solved numerically by discretizing the rudder and cavity surface elements of the quadrilateral panels with constant strengths of sources and dipoles. The strengths of the singularities are determined satisfying the boundary conditions on the rudder and cavity surfaces. The extent of the cavity, which is unknown a priori, is determined by iterative procedure. Series of numerical experiments are performed increasing the degree of complexity of the rudder geometry and oncoming flows from the simple hydrofoil case to the real rudder in the circumferentially averaged propeller slipstream. Numerical results are presented with experimental results.