An underwater cutting and pelletizing apparatus includes: a cutting device that cuts, with a cutter in a water chamber, molten resin, extruded from a die, into pellets; a separation device that separates, from carrier water, pellets sent from the water chamber of the cutting device to downstream with carrier water; a tank that is disposed below the separation device and stores carrier water discharged from the separation device; and a circulation path formed so as to circulate carrier water between the tank and the water chamber, wherein a hydroelectric power generator is provided on a return side of the circulation path formed on a downstream side of the water chamber, and generates electricity from the energy of the carrier water flowing downward in this path. According to such a configuration, the underwater cutting and pelletizing apparatus is made so as to achieve energy savings by recovering and reusing potential energy accompanying carrier water pumped up to a higher location.