Increasing turbine inlet temperature is beneficial to enhance turbine performance. However, this also results in stringent cooling requirements. Unlike turbines in air cycle machines, the partial admission axial impulse turbines for underwater vehicles can utilize the abundant seawater as the cooling medium. In addition, the short blades cannot accommodate the complex cooling channels used in aero-engines, and the alternative way is jet impingement liquid cooling. This paper proposes a fluid–thermal–structural coupling method to investigate the performance of partial admission axial impulse turbines with water-cooling on the rotating wheel front surface. The volume of fluid multiphase model is employed to study the transient gas–liquid interaction, while the Lee model is chosen to model the heat and mass transfer during phase change. Also, a two-way weakly coupling method among fluid, thermal, and structure is utilized to account for fluid–structure interaction. The results show that the temperature distribution at the turbine wheel drops significantly with the jet impingement liquid cooling. The turbine efficiency is also reduced by 3.38% due to the mixing of cooling medium and gas. From stress analysis, the use of water-cooling can minimize turbine damage and ensure stable turbine operation. This study provides insight into the cooling method for partial admission axial impulse turbines for the underwater vehicle.