An autonomous underwater vehicle (AUV) "Rainbow" has been developed in Kyushu University. The vehicle is an ocean observation robot to measure space continuous data to complement ocean acoustic tomography or remote sensing by an artificial satellite. Cruising range is important for this type of observation AUV. The AUV is system independent of the outside, so that it has to save energy stored in the vehicle during a cruise; for this purpose, a shape with low resistance is desirable. Efficiency of the propeller depends on the flow field around the vehicle, so that a design taking into consideration mutual interference between the propeller and the body is needed for optimal cruising range. In this study, calculations of the flow field around the body were carried out based on computational fluid dynamics and the body shape was optimized to reduce the resistance and to improve efficiency of the propeller. The drag coefficient of the body based on the calculated flow field is compared to experimental results. Effect of the body shape on drag and efficiency of the propeller are investigated and optimization of the body shape is discussed.