Analyzing the vibration characteristics of an underwater rotating propeller is crucial for predicting the structural damage of the propeller and preventing the failure of an entire propulsion system. The laser Doppler vibrometer (LDV) measurement technology is a good alternative to conventional contact sensors for the analysis of underwater structures. In this paper, a tracking LDV technique for the vibration measurement of propeller blades that rotate underwater is presented. The underwater vibration measurement of a rotating propeller is affected by the environmental conditions of the water, cavitation, and turbidity. The purpose of this study is to investigate the effects of underwater environmental conditions on the vibration measurement of a rotating propeller with the tracking LDV measurement technique. The vibration response measurements were performed in a water environment, and cavitation bubble and turbidity effects were simulated. To improve the quality of the measurement signal, the PCA-based feature extraction technique was used to remove abnormal signals including noise and irrelevant components and determine the natural frequency of the marine propeller. The final results show that the tracking LDV method with PCA-based feature extraction is suitable for in-situ health monitoring of rotating objects in real underwater environments.