Abstract: An optical navigation system and method for underwater vehicles. The system is disposed within a pressure housing to protect the system's components from high pressures at depths as great as the ocean's floor. The system includes an optical sensor that takes multiple images, e.g., an ocean floor, through a sensor lens. A light source produces a light beam that is offset from the sensor lens. The light source reflects light directly into the field-of-view of the sensor, e.g., on the ocean floor. Software is stored in memory resident within the housing. The software determines the offset of features between at least two images taken with the sensor. Navigation information derived from these images may include a vehicle's two-dimensional position.