Aiming at the low efficiency of electric-powered propulsion system of a loitering muntion, unsteady aerodynamic calculation of the experimental subject was carried out, and the main reason was determined to be the aerodynamic loss caused by the propeller hub. To obtain an electric-powered propulsion system that meets the requirement of small loitering munition, the vortex theory and the first-order motor model are used to establish the efficiency calculation model of the propulsion system. The matching parameters of propeller and motor are optimized, the propeller design index and motor parameters are given, and the motor selection and propeller design are completed. The design results were verified through the propulsion system wind tunnel test, and the propulsion system efficiency at cruise was increased by 18.4%. The results show that the fault was rightly confirmed and the optimization design is effective, which can provide guidance for the design of similar products.