Abstract Dissimilar joint between low alloy steel 16Mn and 304L austenitic stainless steel was welded in the air and under water with two different flux-cored wires: commercially obtained ER308 filler and specially developed nickel-based tubular wire. For microstructure comparison, dissimilar welded joints in the air and under water were acquired at the same welding procedures. The effect of water environment on microstructure, alloying elements distribution and microhardness profiles of dissimilar welded joints was discussed. The results show that typeⅡ boundary existed between austenitic weld metal and ferritic base metal in underwater welds similar to that in the air welds. The underwater Ni-based welds had a lower dendritic spacing than air welds. The amount of delta-ferrite present in underwater welds with ER308 filler was more than that in air welds because of the higher cooling rate in water environment. Major alloying elements were non-uniformly distributed along the austenitic weld metal/16Mn interface. Macroscopic composition gradients did not tend to form in air welds because of high heat input. Maximum microhardness value of 470 HV in wet welded joints was found in coarse-grained heat affected zone instead of transition zone. The transition zone at 16Mn side of underwater austenitic stainless steel welded joints exhibited high microhardness of 330 HV, which was strongly diluted by ferritic base metal.