Water jet propulsion system has low efficiency than screw propeller at low speed, but has been applied in high speed ship due to its better cavitation performance and high rotation capacity. In this study, a numerical analysis was conduct to understand the flow in the propulsion system of 200HP grade water jet for small ship. As the result, it could be confirmed that total pressure and force of the flow was increased through the impeller and the straight-ability of discharging flow to outlet was improved by guide vane. Also, the reliability of numerical analysis was secured by comparing peripheral velocity calculated by design values with that calculated by numerical analysis.