The effective exhaust velocity is the velocity of an exhaust stream after reduction by effects such as friction, non-axially directed flow, and pressure differences between the inside of the rocket and its surroundings. The effective exhaust velocity is one of two factors determining the thrust, or accelerating force, that a rocket can develop, the other factor being the quantity of reaction mass expelled from the rocket in unit time. In most cases, the effective exhaust velocity is close to the actual exhaust velocity.

As an example, a present-day chemical rocket may achieve an effective exhaust velocity of up to 4 kilometers per second. Although this is not high compared with what may be achieved in the future, a large thrust is nevertheless produced owing to the enormous amount of reaction mass which is jettisoned every second. Chemical rockets generate high thrust, but only for short periods before their supply of propellant is used up. The final velocity a spacecraft can achieve is fixed by the exhaust velocity of its engines and the spacecraft's mass ratio as shown by the rocket equation. Because the exhaust velocity of chemical rockets is so low, they would demand an unachievably high mass ratio in order to propel a spacecraft to the kind of speeds required for practical interstellar flight. Other propulsion strategies must therefore be considered for journeys to the stars.