Hydrokinetic power as a clean renewable energy has been aroused a widespread concern. Horizontal axis turbines are widely used in the field of tidal and river current energy power generation, but their internal flow loss characteristics have not been fully revealed. In this paper, a micro horizontal axis river ducted turbine is taken as the research object, and the flow loss characteristics of the turbine under different yaw angles and tip clearances are analyzed by numerical simulation method combined with entropy production theory. A detailed entropy production analysis shows that most of the energy losses take place near the blade tip, at the outlet of the duct, and in the downstream wake region. The turbulent dissipation is the main cause of entropy generation in the ducted turbine. Results demonstrated that with the increase of the yaw angle, the power coefficient Cp increases first, and then reduces. The Cp is up to maximum at θ = 10°. When θ = 25°, the maximum value of Cp decreased by 24.8%, compared with θ = 10°. It is also suggested that there is no obvious negative effect to shaft work and power coefficient for ducted turbine under certain yaw environment (θ ≤ 10°) and the optimal tip clearance should be between 0.02D and 0.04D.