Time-resolved electron diffraction harbors great promise for resolving the fastest chemical processes with atomic level detail. The main obstacles to achieving this real-time view of a chemical reaction are associated with delivering short electron pulses with sufficient electron density to the sample. In this article, the propagation dynamics of femtosecondelectron packets in the drift region of a photoelectron gun are investigated with an N-body numerical simulation and mean-field model. It is found that space-charge effects can broaden the electron pulse to many times its original length and generate many eV of kinetic energy bandwidth in only a few nanoseconds. There is excellent agreement between the N-body simulation and the mean-field model for both space-charge induced temporal and kinetic energy distribution broadening. The numerical simulation also shows that the redistribution of electrons inside the packet results in changes to the pulse envelope and the development of a spatially linear axial velocity distribution. These results are important for (or have the potential to impact on) the interpretation of time-resolved electron diffractionexperiments and can be used in the design of photoelectron guns and streak tubes with temporal resolution of several hundred femtoseconds.