With increasing concerns about environmental pollution, the shipping industry has been considering various fuels as alternative power sources. This paper presents a study of the holistic environmental impacts of eco-friendly alternative ship fuels of marine gas oil (MGO), liquefied natural gas (LNG), and hydrogen across each of their life cycles, from their production to the operation of the ship. The environmental impacts of the fuels were estimated by life-cycle assessment (LCA) analysis in the categories of well-to-tank, tank-to-wake, and well-to-wake phases. The LCA analysis was targeted for a 170 gross tonnage (GT) nearshore ferry operating in the ROK, which was conceptually designed in the study to be equipped with the hydrogen fuel cell propulsion system. The environmental impact performance was presented with comparisons for the terms of global warming potential (GWP), acidification potential (AP), photochemical ozone creation potential (POCP), eutrophication potential (EP), and particulate matter (PM). The results showed that the hydrogen showed the highest GWP level during its life cycle due to the large amount of emissions in the hydrogen generation process through the steam methane reforming (SMR) method. The paper concludes with suggestions of an alternative fuel for the nearshore ferry and its production method based on the results of the study.