At present, the micro-Doppler effects of underwater targets is a challenging new research problem. This paper studies the micro-Doppler effect of underwater targets, analyzes the moving characteristics of underwater micro-motion components, establishes echo models of harmonic vibration points and plane and rotating propellers, and reveals the complex modulation laws of the micro-Doppler effect. In addition, since an echo is a multi-component signal superposed by multiple modulated signals, this paper provides a sparse reconstruction method combined with time–frequency distributions and realizes signal separation and time–frequency analysis. A MicroDopplerlet time–frequency atomic dictionary, matching the complex modulated form of echoes, is designed, which effectively realizes the concise representation of echoes and a micro-Doppler effect analysis. Meanwhile, the needed micro-motion parameter information for underwater signal detection and recognition is extracted.