An effective automatic target detection algorithm based on wavelet transform, which takes advantage of the localization and the orientation of wavelet analysis, is proposed. The algorithm detects the target in the vertical component of the wavelet transformation of the image. After mutual energy combination and sea clutter suppression through spatial weighting and thresholding, the target is located through maximum energy determination and its size is indicated through similarity measurement function of two overlapping windows. Experiment results show that the target can be detected by the algorithm in a single image frame and the better efficiency can be obtained also under the complicated backgrounds of existing the disturbances of cloud layer and fish scale light.