A compressed-air powered drive system for a vehicle (10) or a propeller-driven aircraft (12). In a land vehicle (10), the drive system includes a plurality of air motors (20) each driving a wheel (16) through a transmission device (18). Compressed air from an air storage tank (12) is supplied through a heat exchanger (40) to drive air motors. A fuel is burned in the heat exchanger (40) to provide hot, high pressure air to the first air motors. Water may be injected into the heat exchanger to provide a hot steam. A plurality of air pumps (22) are engaged with and driven by the wheels to pump air into the tank during driving. When braking, the air pumps (22) driven by the wheels (16) recapture kinetic energy by pumping air into the tank. The air motors can also act as pumps to pump air into the tank during braking by reversing the transmission devices.