As the development tends towards high-speed, large-scale and high-power, power of the ship main engine becomes larger and larger. This make the engine design and cabin arrangement become more and more difficult. Ship maneuverability becomes bad. A new ship propulsion system, integrated hydraulic propulsion (IHP), is put forward to meet the development of modem ship. Principle of IHP system is discussed. Working condition matching characteristic of IHP ship is studied based on its matching characteristic charts. According to their propulsion principle, dynamic mathematic models of IHP ship and direct propulsion (DP) ship are developed. These two models are verified by test sailing and test stand data. Based on the software Matlab/Simulink, comparison research between IHP ship and DP ship is conducted. The results show that cabin arrangement of IHP ship is very flexible, working condition matching characteristic of IHP ship is good, the ratio of power to weight of IHP ship is larger than DP ship, and maneuverability is excellent. IHP system is suitable for engineering ship, superpower ship and warship, etc.