The invention discloses an installation method of a steering oar integrated propelling system. The method includes the following steps that S1, a rudder trunk section is pre-assembled; S2, stern general assembly carrying deformation is predicted; S3, a stern is generally assembled and carried; and S4, a shaft system, a propeller and rudder blades are installed. The method includes the specific steps that the section where a rudder trunk is located is leveled, a theoretical rudder system center line L1 on the section where the rudder trunk is located is found, the level of a steering engine platform is measured through a total station, the rudder trunk and a hull structure are welded, according to the prediction of general assembly carrying welding shrinkage deformation and stern sinking finite element analysis, reverse deformation is set in a stern block carrying stage, then the stern is generally assembled and carried, and finally, the shaft system, the propeller and the rudder bladesare installed. The brand-new method is adopted for meeting the requirement for the shaft system and rudder system installation accuracy, the one-time installation success rate is increased, the steering oar matching high-accuracy technical requirement can be met, and a period of a dock is shortened.