Dual cooled annular fuel is a novel fuel design, which has the potential to improve the reactor power density while maintaining or improving its safety margin. The effects of tight-lattice geometry, fuel burnup, fuel expansion, coolant channel blockage on the thermal hydraulic performance of annular fuel is studied to illustrate its special features in this paper. A sub-channel analysis code named NACAF, which includes empirical constitutive models in consideration of tight-lattice effects on prediction of pressure drop, critical heat flux and turbulent mixing, channel blockage model, heat conduction model for dual surface cooling condition, coolant flowrate distribution between inner and outer channel, is developed for annular fuel assembly or core analysis based on homogenous fluid model. Validation work is carried out with comparing NACAF results with analytical solutions, as well as numerical results of existing sub-channel code for annular fuel, such as VIPRE-01 and TAFIX. Comparison results demonstrates NACAF’s prediction error is acceptable and it has the ability to simulate thermal hydraulic performance of annular fuels or annular fuel bundles. Based on the developed and verified NACAF, the special thermal hydraulic phenomena of annular fuel are studied to clarify the features of annular fuel.