A thrust system for a watercraft including a propeller shaft, a propeller shaft housing and a hydraulic thrust bearing assembly. The propeller shaft has an enlarged diameter shoulder, and the housing is positioned around and allows axial movement of the propeller shaft. The hydraulic thrust bearing assembly is axially constrained between the propeller shaft shoulder and the housing. The hydraulic thrust bearing assembly includes an annular cylinder, an annular piston, at least one oil feed passage and at least one oil bleed port. The annular cylinder surrounds the propeller shaft and has a circular groove. The annular piston surrounds the propeller shaft and is movably positioned within the circular groove of the annular cylinder forming a pressurized chamber. Each oil feed passage and oil bleed port allows oil to be communicated relative to the pressurized chamber. The hydraulic pressure developed in the pressurized chamber is proportional to thrust.