A kind of miniature underwater imaging system with continuous illumination is designed,which is mainly used for small water download or improving the underwater visual ability. The system consistes of several pieces of high power LED as the illuminator,and a CCD as the receiver. In order to improve the image quality further,the characteristic of underwater image with continuous illumination is analyzed,and a kind of image processing algorithm based on imaging model is developed. The algorithm is implemented on the embedded platform based on DM642. The system is tested in pool indoor and outdoor. The results show that detection range of the system can reach above 2.3 attenuation length for the target with black-white stripes,and this image processing algorithm can improve the contrast of the image and stand out the details of the target in the case of various background.