This paper depicts numerical analysis on Impulse turbine with fixed guide vanes for wave energy conversion. From the previous investigations, it is found that one of the reasons for the mismatch between computed and experimental data is due to neglecting tip clearance effect. Hence, a 3-D model with tip clearance has been generated to predict the internal flow and performance of the turbine. As a result, it is found that the comparison between computed and experimental data is good, quantitatively and qualitatively. Computation has been carried out for various tip clearances to understand the physics of tip leakage flow and effect of tip clearance on performance of such unconventional turbine. It is predicted that the turbine with 0.25% tip clearance performs almost similar to the case of without tip clearance for the entire flow coefficients. The designed value of 1% tip clearance has been validated numerically and computed that the efficiency of the turbine has been reduced around 4%, due to tip clearance flow at higher flow coefficients. (C) 2003 Elsevier Ltd. All rights reserved.