In a boundary layer ingesting (BLI) propulsion system, the fan is continuously exposed to inflow distortions. The distorted inflows lead to non-uniform loss distributions along the radial and circumferential directions. Since the rotor tip suffers from higher intensive distortion, the local loss increment is a major contributor to the BLI fan performance penalty. To explore the effects of distorted inflows on tip leakage flow evolutions and associated mechanisms for increased loss in a BLI fan, three-dimensional full-annulus unsteady simulations are conducted. Results show that about 54% of total additional losses due to distortion are formed in tip region and more than 80% of tip entropy generation is related to the tip leakage flow. The intensities of leakage vortex-shock interactions vary at different annulus locations. When the rotor moves into distorted region, the vortex-shock interaction is weaker than the undistorted locations due to attenuated leakage flow. At the locations where the rotor is moving out from distorted region, the vortex-shock interaction is notably enhanced because the front part of blade tip airfoil suffers a higher load, resulting in a rapid vortex core expansion and eventually vortex breakdown. The increase of flow blockage in the front section of blade tip passages at local circumferential positions leads to a corresponding rise of flow loss. The findings in this study highlight the impacts of tip leakage flow on aerodynamic loss of fan working under BLI inflow distortion and provide improved understandings of loss mechanisms in a BLI fan.