The objective of this work is to develop and validate a coupled boundary element method-finite element method to simulate the transient fluid-structure interaction response of tidal turbines subject to spatially varying inflow. The focus is on tidal turbines, although the methodology is also applicable for the analysis and design of wind turbines. An overview of the formulation for both the fluid and solid domains, and the fluid-structure interaction algorithms, is presented. The model is validated by comparing the predicted thrust and power measurements, as well as cavitation patterns, with experimental measurements and observations for an 800 mm marine current turbine presented in the work of Bahaj (2007, “Power and Thrust Measurements of Marine Current Turbines Under Various Hydrodynamic Flow Conditions in a Cavitation Tunnel and a Towing Tank,” Renewable Energy, 32, pp. 407–426). Additional numerical results are shown for the same turbine, but scaled up to 20 m in diameter, operating in a tidal boundary layer flow with a water depth of 30 m. The results show that transient cavitation will develop near the blade tip when the blades are near the free surface at highly-loaded off-design conditions, and the blades will undergo excessive deformation because of the high fluid loading and slender blade profile. The results also show that the natural frequencies of the blades are significantly reduced when operating in water, as compared with when operating in air, because of added-mass effects. In addition to demonstrating the need for proper consideration for fluid cavitation and structural response, current design challenges for both wind and tidal turbines are discussed.