This paper elucidates the performance degradation and flow instability of an axial fan caused by the presence of disk-shaped obstacles upstream of the fan, such as wall surfaces. The increase in pressure loss and the decrease in shaft power coefficient due to inlet swirl flow, and the increase in pressure loss due to the outlet swirl flow, cause performance degradation. When the obstacle is closer to the fan, the strong swirl flow causes a negative pressure region between the fan and the obstacle, reversing the flow direction. This phenomenon is caused by the diffuser effect of the outward flow and the increase in pressure by acting as a multi-blade centrifugal fan. At a low flow rate, a clockwise vortex is generated at the center of the obstacle and induces two counterclockwise rotating vortices. The vortices circumferentially separate the inward and outward flows along the fan's axis in a uniform manner, and their cores are circularly rotated by the clockwise vortex. These findings can contribute to the layout of fans under spatial restriction and suppression of flow instability due to obstacles.