The ducted coaxial propeller (DCP) has great application value in eVTOL aircraft because of its high safety, compactness, and low noise. A numerical simulation method for the DCP is established using the sliding mesh technique. A DCP was designed and manufactured for the lift and power test to verify the numerical method. The characteristics of airflow separation inside the DCP were studied, and the influence of the vortex restrain ring (VRR) on the suppression of airflow separation and on lift augmentation of the duct is analyzed. Results show that, when the tip clearance ratio increases from 0.336% to 1.342%, both the total lift and aerodynamic efficiency decrease by about 11.3%. The influence is mainly reflected in the formation of the tip vortex, airflow separation in the straight, and diffusion sections of the duct. Tip vortex and airflow separation increases DCP energy dissipation and clogs the inner wall of the duct, reducing the effective inner diameter and airflow through the duct. Moreover, the role of the duct is weakened, and the wake is contracted, which increases the induced power loss. By adding a VRR to the diffusion section, the tip vortex and airflow separation can be effectively suppressed, which can increase the aerodynamic efficiency by 5.1%.