For power supply of autonomous underwater vehicles (AUV), a novel underwater contactless power transmission (CPT) system based on the arc electromagnetic coupler (EC) is proposed in this paper. The equivalent circuit model of EC is established to analyze the transmission efficiency theoretically, thus the working frequency and the load resistance are optimized. Then the additional eddy current (AEC) loss and the transmission efficiency are analyzed by finite element analysis (FEA) method. Finally, theoretical analysis and simulation results are verified by underwater experiments, which have a maximal transmission efficiency of 82% with a 5 mm gap length.