Augmented Reality (AR) is a term for a view of a physical real world environment whose elements are combined with virtual computer based imaginary that will create a mixed reality. This paper overviews on the process of the development of an AR application of Malaysia's Underwater Habitat. Due to time, cost and manpower constraints, the development of the application will be based on Redang Island in Terengganu. It is one of the most popular islands in Malaysia among scuba divers. To create this AR application, ARToolKit can be taken into consideration. It is hope that the application could help first time scuba divers to explore and experience before they go into the real underwater. This application also will provide information about the chosen underwater habitat. Therefore this paper is intended to give an overview of augmented reality application of Malaysia's underwater habitat. It can also help to promote tourism in Malaysia. This application will benefit the Department of Fisheries Malaysia through warehousing the information such as images, audios and videos of underwater habitat. Another stakeholder that has the advantage is Malaysian Ministry of Culture, Arts and Tourism. It is because of the application will promote Malaysia. The application also will contribute to Professional Association Diving's Instructor (PADI) as it can be one of the supporting tool in their teaching aids for scuba divers. © 2010 IEEE.