Marine hydrokinetic turbine, when operating in a shallow channel is subjected to the boundary proximity effects from a deformable free surface on top and the channel bottom. A close proximity of turbine to these boundaries modifies the flow-field around the turbine and affects device performance. Significant flow acceleration occurs in and around the turbine rotation plane; the magnitude of which depends on size of the turbine relative to the channel cross-section and is commonly referred to as solid blockage. In addition, the wake behind the turbine creates a restriction to the flow called wake blockage. We focus on unraveling the influence of boundary proximity and blockage on the turbine performance through coupled experimental and computational studies. The experiments were carried out in an open surface water channel with a three bladed, constant chord, untwisted marine hydrokinetic turbine submerged at different depths and performance was evaluated under various operating conditions. The findings were complimented by a steady state computational fluid dynamics study that was carried out to understand the effect of flow Reynolds number and solid blockage on the turbine performance. A reduction in tip-depth of immersion was observed to improve the turbine performance until it reached an optimum depth beyond which a reduction in performance was observed due to free surface interaction with wake and bypass region. A transient CFD analysis with volume of fluid approach was performed to incorporate free-surface and buoyancy effects and augment flow-field characterization behind the turbine in the wake, upper bypass, and lower bypass regions. For low tip clearance ratios, a significant drop (up to 5–10% of channel depth) in free surface was observed behind turbine with complex three dimensional flow structures that lead to a skewed wake affecting its expansion and restoration process.