The aim of this research is to design and to develop a computer controlled low-cost underwater welding setup for shielded metal arc welding (SMAW) process to work in dry as well as in wet welding conditions. Investigations of the microstructure and mechanical properties of the welded joints made from AISI 1010 steel plates using this setup, in air, tap water, and saltwater working environment, respectively, have been carried out. Weld bead geometry, microstructure, ultimate tensile strength (UTS), ductility, impact strength and Vickers microhardness of air and wet welded joints have been characterized and compared. The general weld bead size is quite dissimilar for air, tap water and salt water welded joints. The tap water and salt water welds seem to be wider with a slightly higher weld penetration with lower reinforcement. The maximum value of the the average UTS of the welded sample as per ASTM was 485.74 MPa. The experiments showed that the maximum percentage of elongation of samples welded in different conditions is 8.06 % and the maximum value of the average impact strength of 25.64 J was found in case of air welds. The microhardness value of fusion zone (FZ) was greater than base metal (BM) in all the welded samples. It was noted maximum up to 310.8 HV10 at coarse grain heat affected zone (CGHAZ) of tap water welds. The mechanical properties of the salt water welds deteriorated due to porosity, slag inclusion, undercut, increase in hydrogen and oxygen content in the welds.