The electrical representation of the contactless power transfer (CPT) system with a coaxial transformer for the power traction in the rotary drilling system is presented. The air gap in the rotary transformer can lead to a lot of leakage inductance, so that the series-series (SS) compensation capacitors are used to increase the efficiency and the capability of the system. Moreover, the frequency response of the SS compensated CPT system is analyzed, and the transfer characteristics of the CPT system are revealed at different resonant frequencies. It is shown that the phase angle of the input impedance at resonant frequency determines the operation mode of the CPT system. At resonant frequency ω 0 , the system can operate in constant-current (CC) mode, whereas at resonant frequency ω H , it can work in constant-voltage (CV) mode. In the application of the drilling system, the CV mode owning good load regulation is more preferred than the CC mode for a wide range of load variation. At last, the analysis result is verified by experiment. The experimental results indicate that the CPT system in the CV mode can produce a 30 ∼ 35 V voltage output and can transfer maximum power 180 W with an efficiency of 78.5%. The proposed CPT system can well meet the requirement of power supply in the drilling system.