For a panoramic sea image with complex backgrounds and the sea-sky-line shows as a nearly circle, this paper proposes a panoramic sea-sky-line extraction algorithm based on fractal dimensions and improved Hough circle transform. It firstly calculates the fractal dimensions of the panoramic sea image by blanket-covering method, then extracts the images of panoramic acquisition devices and other equipment to eliminate their adverse effects on sea-sky-line detection based on these fractal dimensions. As the traditional gradient Hough circle transform can not give out a correct solution when it is used to extract the panoramic sea-sky-line, an improved Hough circle transform algorithm is put forward. 400 frame panoramic sea images extracted in different conditions are processed. Experimental results show that this proposed algorithm effectively extracts the circle panoramic sea-sky-lines under conditions of ideal background, lower contrasts images and the sea-sky-line with partial loss or severe breaking and its detection accuracy reaches 95.75%. The applicability and robustness of the proposed algorithm are excellent.