The use of Glass fiber reinforced plastics (GFRP) in underwater applications has been increasing in recent times, due to its superior durability and chemical stability in corrosive environments compared to metals. However, penetration of moisture in to the polymer matrix can adversely affect the mechanical properties of composite materials. In this study, the effect of exposure to plain water and simulated sea water (3.5% by weight NaCl salt) water on the mechanical properties of GFRP specimens has been analyzed. Tensile and three point bend tests were conducted on composite specimens with different moisture contents to characterize the mechanical degradation due to moisture absorption. Gravimetric tests were conducted on specimens to calculate the moisture absorption parameters. The results indicate that plain water is absorbed at a faster rate compared to salt water. Using these parameters, a transient moisture diffusion model was developed using commercial finite element software ABAQUS®. The results of tensile and three point bend testing indicate that both tensile and flexural properties of glass fiber reinforced epoxy composites degrade with exposure to plain water and salt water. Further, a coupled hygro-mechanical model was developed in ABAQUS® and the simulation results were compared with actual test results. Scanning electron Microscopy was used to examine the fracture surface of failed specimens. The cause for mechanical degradation seems to be the deterioration of fiber-matrix interface due to the penetration of water molecules.