An area-directed interpolation algorithm for underwater laser image (AIU) was proposed. Firstly, wavelet transform was performed on the low-frequency components to remove speckle noise and enhance image quality. Then an image was segmented into object area and background area. And whether an interpolated pixel belonged to the object region or not was decided by an approach combining the method of nearest neighbor and statistical mode. The points in the same area are interpolated linearly. For transition pixels between different areas, nonlinear interpolation formulas were designed. Large weights were assigned to neighboring pixels belonging to the same area with the interpolated pixel in the nonlinear formulas, while the neighbering pixels in the different area with the interpolated pixel were assigned with little weights. By choice of different weights, the contrast between object and background can be adjusted to obtain clear object and facilitate object discover and observation. Experiments demonstrate that this method is efficient and feasible.