Novel aircraft designs with (distributed) propellers often feature a close coupling between propellers and air¬frame, leading to unsteady blade loading which impacts propeller efficiency, noise emissions, and vibrations. The goal of this paper is to study the impact of such installation effects on propeller design optimization. A combination of existing, rapid analysis models is used to compute the installed aerodynamic and acoustic propeller performance. These analysis models are coupled to a gradient-based optimization scheme for the design studies. Comparisons are made between optimizations performed with and without taking installation effects into account, analyzing a 5-deg angle-of-attack case and a boundary-layer-ingestion case. The results show that increasing the blade count improves aerodynamic and acoustic performance both for isolated and installed configurations. Furthermore, the acoustic performance is improved significantly by decreasing the blade tip Mach number, albeit with associated efficiency penalty. For the nonuniform inflow fields considered, accounting for installation effects inside the optimization procedure did not lead to large benefits in terms of aerodynamic and acoustic performance compared to the isolated design. For the 5-deg angle-of-attack case, the installed design was similar to the design for symmetric inflow, with negligible change in propeller efficiency and at most 0.5 dB noise reduction. For the boundary-layer-ingestion case, the installed design featured in¬creased solidity and decreased twist, resulting in 0.4% lower energy consumption compared to the design for symmetric inflow. Acoustic performance was not evaluated for this case. Future work will focus on the sensi¬tivity of the results to the blade tip Mach number, the impact of sweep and airfoil design on installed propeller performance, and acoustic optimization of installed configurations with more complex nonuniform inflow fields.