The Advanced Topographic Laser Altimeter System (ATLAS) carried on the Ice, Cloud, and land Elevation Satellite-2 (ICESat-2) launched by NASA in 2018 is the only spaceborne photon counting lidar in the world so far. It has a high orbital spatial sampling rate, which makes it possible to detect ocean wave elements by remote sensing. The premise of photon counting lidar for wave detection is to accurately extract signal photons from the sea surface and determine the instantaneous sea surface profile. Up to now, there are few reports on the detection of sea surface morphology and wave elements by spaceborne photon counting lidar, and there is also a lack of extraction methods specifically for sea surface signal photons. Based on the distribution characteristics of signal photons on the sea surface, a new signal extraction algorithm is proposed in this paper. First, the rough denoising of sea surface echo photons is completed through histogram statistics and adaptive threshold selection; Then, based on the lidar spot size and sea surface fluctuation characteristics, an appropriate search neighborhood is selected to calculate the density of signal points and noise points. The point density difference is used to classify signal photons and noise photons; Finally, the backscattered noise photons with higher density are further removed by Gaussian function fitting, and the signal photons reflected from the sea surface are obtained. Using the above algorithm, the sea surface signal photons and instantaneous sea surface profiles of seven different sea state regions in the Pacific Ocean are extracted, and the peak wavelength and peak wave period of local ocean waves are further calculated. Comparing the calculation results with the global atmospheric reanalysis ECMWF Re-Analysis5 (ERA5) data of the European Centre for Medium-Range Weather Forecasts (ECMWF) during the same period, the results are basically consistent in sea areas with different wind speeds and water depths. As a result, the relative error of the wave period in more than half of the areas is within 5%, which preliminarily proves the feasibility of calculating ocean wave elements with the spaceborne photon counting lidar observation results.