A marine propulsion system includes an internal combustion engine; a fuel reservoir; a pump that pumps fuel from the fuel reservoir to the internal combustion engine; and a fuel filter that filters the fuel. The fuel filter includes a canister and a fuel inlet that conveys the fuel adjacent to cylindrical sidewalls of the canister so that the fuel immediately spirally flows around and down the cylindrical sidewalls under centrifugal force and under force of gravity, and then is drawn radially inwardly through a filter element by the pump. A fuel outlet extends at least partially along a center axis of the canister and discharges the fuel from the canister. A drain is located at the bottom of the canister and configured to drain water that separates from the fuel as the fuel flows around and down the cylindrical sidewalls.