Daedalus would be constructed in Earth orbit and have an initial mass of 54,000 tons including 50,000 tons of fuel and 500 tons of scientific payload. Daedalus was to be a two-stage spacecraft. The first stage would operate for two years, taking the spacecraft to 7.1% of light speed (0.071 c), and then after it was jettisoned, the second stage would fire for 1.8 years, taking the spacecraft up to about 12% of light speed (0.12 c), before being shut down for a 46-year cruise period. Due to the extreme temperature range of operation required, from near absolute zero to 1600 K, the engine bells and support structure would be made of molybdenum alloyed with titanium, zirconium, and carbon, which retains strength even at cryogenic temperatures. A major stimulus for the project was Friedwardt Winterberg's inertial confinement fusion drive concept, for which he received the Hermann Oberth gold medal award.

This velocity is well beyond the capabilities of chemical rockets or even the type of nuclear pulse propulsion studied during Project Orion. According to Dr. Tony Martin, controlled-fusion engine and the nuclear-electric systems have very low thrust, equipment to convert nuclear energy into electrical has a large mass, which results in small acceleration, which would take a century to achieve the desired speed; thermodynamic nuclear engines of the NERVA type require a great quantity of fuel, photon rockets have to generate power at a rate of 3×109 W per kg of vehicle mass and require mirrors with absorptivity of less than 1 part in 106, interstellar ramjet's problems are tenuous interstellar medium with a density of about 1 atom/cm3, a large diameter funnel, and high power required for its electric field. Thus the only suitable propulsion method for the project was the nuclear pulse rocket.

Daedalus would be propelled by a fusion rocket using pellets of a deuterium/helium-3 mix that would be ignited in the reaction chamber by inertial confinement using electron beams. The electron beam system would be powered by a set of induction coils trapping energy from the plasma exhaust stream. 250 pellets would be detonated per second, and the resulting plasma would be directed by a magnetic nozzle. The computed burn-up fraction for the fusion fuels was 0.175 and 0.133 producing exhaust velocities of 10,600 km/s and 9,210 km/s respectively. Due to scarcity of helium-3 on Earth, it was to be mined from the atmosphere of Jupiter by large hot-air balloon supported robotic factories over a 20-year period, or from a less distant source, such as the Moon.

The second stage would have two 5-metre optical telescopes and two 20-metre radio telescopes. About 25 years after launch these telescopes would begin examining the area around Barnard's Star to learn more about any accompanying planets. This information would be sent back to Earth, using the 40-metre diameter second stage engine bell as a communications dish, and targets of interest would be selected. Since the spacecraft would not decelerate, upon reaching Barnard's Star, Daedalus would carry 18 autonomous sub-probes that would be launched between 7.2 and 1.8 years before the main craft entered the target system. These sub-probes would be propelled by nuclear-powered ion drives and would carry cameras, spectrometers, and other sensory equipment. The sub-probes would fly past their targets, still travelling at 12% of the speed of light, and transmit their findings back to the Daedalus' second stage, mothership, for relay back to Earth.