Vertical-axis hydrokinetic turbines are promising option to harness the low velocity currents. However, limited investigations have been carried out considering the interactions between the turbine rotor and the channel section, including the free-surface. Thus, a vertical-axis turbine model has been designed and manufactured, to be tested in an open channel. Also, a three-dimensional multiphase simulation has been carried out, using the volume of fluid (VOF) model, to capture the air–water interface and to investigate the free-surface variations effects on the turbine output. Experimentally, the turbine model has been characterized under different flow conditions and free-surface levels. The peak power coefficients are found to increase with the upstream velocity. This effect is directly linked to the blockage ratio and the Froude number. A reasonably good match has been found between the experimental and the numerical results. The VOF model is able to simulate the free-surface longitudinal variations, and the effect of the turbine blockage of the channel. The velocity field and the pressure coefficient distribution, around the turbine rotor, have been studied and correlated with the free-surface variations from upstream to downstream of the turbine. Finally, the vortex street generated by the blade–plate interaction has been analyzed.