This paper presents the design criteria of a permanent magnet motor for hydrofoil boat applications. Based on the dynamic analysis of hydrofoil boat, the constraints of propulsion motor are derived and therefore the surface-mounted permanent magnet motor is chosen as the competitive candidate. In order to have large power density in the permanent magnet motor, the outer- and inner-rotor motors are investigated and compared to demonstrate their advantages at different design constraints, which will provide the theoretical basis to improve the propulsion system in the hydrofoil boat from the perspective of motor design.