Unavoidable tip clearance between blade tip and casing shroud plays an important role in the performance and characteristics of a tidal propeller turbine. In this work, the tip-leakage vortex (TLV) induced in the end-wall region was numerically illustrated by using the shear-stress transport (SST) k–ω turbulence model at various flow conditions and different tip-clearance sizes (TCSs). The swirling strength criterion was employed to visualize the tip-leakage vortex trajectory and investigate vortex evolution according to clearance size change. Although TLV occurs in both design and off-design conditions, vortex intensity develops strongly under excess flow rate with increased tip gap. The extreme influence of TCS on the turbine’s generated power and efficiency was predicted in steady simulations for four TCS cases, namely, δ = 0%, 0.25%, 0.5%, and 0.75%. With the extension of the tip gap, turbine performance was drastically reduced because of vigorous turbulent leakage flow combined with considerable volumetric loss. The effect of TCS on pressure fluctuation intensity were also explored on the basis of the transient simulation statistic. Maximal pressure variation amplitude and dominant frequency were presented in spectrum analysis utilizing fast Fourier transform.