It has been previously suggested that the generation of coherent vortical structures in the near-wake of a self-propelled vehicle can improve its propulsive efficiency by manipulating the local pressure field and entrainment kinematics. This paper investigates these unsteady mechanisms analytically and in experiments. A self-propelled underwater vehicle is designed with the capability to operate using either steady-jet propulsion or a pulsed-jet mode that features the roll-up of large-scale vortex rings in the near-wake. The flow field is characterized by using a combination of planar laser-induced fluorescence, laser Doppler velocimetry and digital particle-image velocimetry. These tools enable measurement of vortex dynamics and entrainment during propulsion. The concept of vortex added-mass is used to deduce the local pressure field at the jet exit as a function of the shape and motion of the forming vortex rings. The propulsive efficiency of the vehicle is computed with the aid of towing experiments to quantify hydrodynamic drag. Finally, the overall vehicle efficiency is determined by monitoring the electrical power consumed by the vehicle in steady and unsteady propulsion modes. This measurement identifies conditions under which the power required to create flow unsteadiness is offset by the improved vehicle efficiency. The experiments demonstrate that substantial increases in propulsive efficiency, over 50 % greater than the performance of the steady-jet mode, can be achieved by using vortex formation to manipulate the near-wake properties. At higher vehicle speeds, the enhanced performance is sufficient to offset the energy cost of generating flow unsteadiness. An analytical model explains this enhanced performance in terms of the vortex added-mass and entrainment. The results suggest a potential mechanism to further enhance the performance of existing engineered propulsion systems. In addition, the analytical methods described here can be extended to examine more complex propulsion systems such as those of swimming and flying animals, for whom vortex formation is inevitable