An efficient boundary-based technique is developed for addressing shape design sensitivity analysis in supercavitating flow problem. An analytical sensitivity formula in the form of a boundary integral is derived based on the continuum formulation for a general functional defined in potential flow problems. The formula, which is expressed in terms of the boundary solutions and shape variation vectors, can be conveniently used for gradient computation in a variety of shape design in potential flow problems. While the sensitivity can be calculated independent of the analysis means, such as the finite element method (FEM) or the boundary element method (BEM), the FEM is used for the analysis in this study because of its popularity and easy-touse features. The advantage of using a boundary-based method is that the shape variation vectors are needed only on the boundary, not over the whole domain. The boundary shape variation vectors are conveniently computed by using finite perturbations of the shape geometry instead of complex analytical differentiation of the geometry functions. The supercavitating flow problem is chosen to illustrate the efficiency of the proposed methodology. Implementation issues for and optimization procedure are addressed in this flow problem.