The design of reactor fuel shape is key for improving thermal–hydraulic performance. The evolution from conventional rod-shaped fuel to helical cruciform and annular configurations reduces hydraulic resistance while increasing heat transfer surface area and facilitating effective lateral coolant mixing. In this context, we present a novel design termed helical annular fuel (HAF). However, the intricate nature of coolant pathway isolation, lateral mixing effects induced by the helical structure, and resistance in the fuel contact regions culminate in complex thermal–hydraulic behaviors. To better understand these behaviors, we conducted computational fluid dynamics (CFD) simulations on a 2 × 2 rod bundle configuration, comparing the thermal–hydraulic performance of HAF with annular fuel. In the comparison, power and cross-sectional areas of both fuel and coolant were kept the same. The results provided a detailed flow field distribution and analyzed the flow mixing characteristics and hotspot locations. Our findings reveal that the helical annular fuel significantly enhances coolant mixing and improves heat transfer efficiency, reducing the maximum outlet temperature by 0.81 K relative to annular fuel, and decreasing the temperature differential between the maximum and minimum outlet temperatures by 2.09 K when the power output of each fuel element is 2.44 kW. Importantly, the analysis identifies the localization of hotspots occurring 6 mm above the self-positioning contact points. This research provides insights for the design of innovative reactor fuel elements and advancement of safer, more efficient nuclear reactor core designs.