This paper proposed an underwater optical image enhancement algorithm based on degradation characteristic indices. First, this method determined the degradation characteristic present in the original image based on the these indices. Second, the image restoration process was performed according to the degradation characteristics of the original image. Finally, an image enhancement method was applied to the restored image using the bounded general logarithm ratio operation. The proposed algorithm was tested to identify degradation characteristics and enhance images in two typical underwater scenarios: one with auxiliary lighting and the other with natural lighting. Processing results showed that the degradation characteristic parameters were restored to a reasonable range, and the image enhancement effect reached an ideal level. For the middle crack image, with a mean adaptive gradient gain of 1.5054, the maximum brightness difference of the aperture layer decreased from 155 to 44, perceptual fog density reduced from 2.38 to 0.37, dynamic range ratio increased from 60.00% to 76.08%, and contrast increased from 6.15 to 107.35. For the slope image, with a mean adaptive gradient gain of 1.5678, the maximum brightness difference of the aperture layer decreased from 65 to 24, perceptual fog density decreased from 0.62 to 0.21, dynamic range ratio increased from 29.41% to 89.80%, color distortion index improved from 0.66 to 1.00, and contrast increased from 30.77 to 316.25. The proposed algorithm was compared with nine existing enhancement algorithms to evaluate its effectiveness. Results show that the proposed algorithm has advantages in terms of image restoration and enhancement.