The Baltic Sea represents an optically complex case 2 water type, where high concentrations of water column constituents limit acquisition of benthic information. Different preprocessing steps were applied to the hyperspectral compact airborne spectrographic imager (CASI) image to extract as much useful benthic information as possible. Atmospheric correction, minimum noise fraction transform, and sun-glint correction were performed to acquire water surface reflectance data. Additionally, a water column removal procedure was applied to acquire bottom reflectance data. Although retrieved CASI water surface reflectance spectra generally matched the magnitudes and shapes of in situ measured spectra, then the applied water column correction algorithm did not yield accurate bottom reflectance spectra. Therefore, both benthic habitat and bathymetry maps were retrieved from the CASI sea surface image data set. An image-based supervised classification method produced a good quality benthic habitat map from the shallow Pakri study area (depth < 3.0 m) with an overall accuracy of 80%. A site-specific algorithm was developed for the bathymetry retrieval utilizing a green–yellow CASI band ratio. Validation of the bathymetry map for depths shallower than 4.0 m revealed an R2 value of 0.88 and a root-mean-square error of 0.32 m. The assessment of the benthic substrate detectability limits in the Baltic Sea revealed that, at the wavelength of deepest light penetration (near 570 nm), the depth restriction for CASI benthic substrate detection was 7.6 m for sand, 5.0 m for green macroalgae, 3.0 m for higher order vegetation, and 3.1 m for brown macroalgae. The depth limit to which bathymetric mapping is practical in our study site was estimated to be around 3.5 to 4.0 m.