We simulate the detection signal of a modulated pulsed underwater light detection and ranging (LiDAR) system and use a fast independent component analysis iterative algorithm to separate the target in the detected signal from the backscatter signal. Our approach succeeds in recovering the echo signals of the weak target in muddy water submerged by strong backscattering and in improving the signal-to-noise rate. To obtain the time delay of the target reflection with respect to the transmitting signal in one step, we used single and triple modulation frequencies as references to demodulate the LiDAR echo signals. The peak position corresponds to the time delay between the target and the detector. After the iterative separation by independent component analysis, the underwater laser detection range can be increased by four to five attenuation lengths.