Applied-field magnetoplasmadynamic thrusters (AF-MPD thrusters) are hybrid accelerators in which electromagnetic and gas dynamic processes accelerate plasma to high speed; they have considerable potential for future space applications with the significant advantages of high specific impulse and thrust density. In this paper, we present a series of protocols for designing and manufacturing a 100 kW class of AF-MPD thruster with water-cooling structures, a 130 V maximum discharge voltage, a 800 A maximum discharge current, and a 0.25 T maximum strength of magnetic field. A hollow tantalum tungsten cathode acts as the only propellant inlet to inhibit the radial discharge, and it is positioned axially at the rear of the anode in order to relieve anode starvation. A cylindrical divergent copper anode is employed to decrease anode power deposition, where the length has been reduced to decrease the wall-plasma connecting area. Experiments utilized a vacuum system that can achieve a working vacuum of 0.01 Pa for a total propellant mass flow rate lower than 40 mg/s and a target thrust stand. The thruster tests were carried out to measure the effects of the working parameters such as propellant flow rates, the discharge current, and the strength of applied magnetic field on the performance and to allow appropriate analysis. The thruster could be operated continuously for significant periods of time with little erosion on the hollow cathode surface. The maximum power of the thruster is 100 kW, and the performance of this water-cooled configuration is comparable with that of thrusters reported in the literature.