Although pneumatic down-the-hole (DTH) hammers have good performance of high penetration rate and minimal deviation tendency in the vertical section of oil and gas wells, they have not been successfully used in directional drilling due to drill tool wear and wellbore disturbance. Herein, we developed a novel type of pneumatic DTH hammer with a self-propelled round bit to overcome the technical difficulties of directional drilling. Nonlinear dynamic modeling developed by the authors was used to analyze the working principle and performance of the novel DTH hammer. The kinematics and dynamics simulation of this hammer were carried out using MATLAB language, and the motion law of the piston was revealed. The performance of the novel hammer was numerically simulated and evaluated by considering fluctuations of the front and rear chamber pressure, impact energy, acceleration, and frequency. The results show that our novel DTH hammer’s working principle is feasible and has an adequate structural design. The simulation results demonstrate reasonable design parameters. Compared to the numerical results for conventional DTH hammers, the velocity and acceleration of the piston of the novel hammer changed smoothly. The frequency was slightly higher than that of conventional hammers, while other parameters were nearly equal. The novel DTH hammer can be used in directional drilling, trenchless drilling, and seabed sampling drilling.