Autonomous Underwater Vehicles (AUV``s) provide an important means for collecting detailed scientific information from the ocean depths. The hull resistance of an AUV is an important factor in determining the power requirements and range of the vehicle. This paper describes a design method that uses Computational Fluid Dynamics (CFD) to determine the hull resistance of an AUV under development. The CFD results reveal the distribution of the hydrodynamic values (velocity, pressure, etc.) of an AUV with a ducted propeller. This paper also discusses the optimization of the AUV hull profile to reduce the total resistance. This paper demonstrates that shape optimization in a conceptual design is possible by using a commercial CFD package. Optimum design work to minimize the drag force of an AUV was carried out, for a given object function and constraints.