The complex water environment, especially the absorption and scattering of particles in the water, causes a large number of backscattered clutter at the receiver of the underwater lidar ranging system. As the distance increases, the target echo will gradually drown in clutter. The modulation technology can effectively improve the contrast of the target and achieve the range extension of underwater lidar. A Monte Carlo simulation model of photon transmission in seawater was firstly established, and then the modulation technology which combining the advantages of lidar and microwave radar was studied. Then the detailed steps of transmitting, receiving and related processing was given when a pseudo-random sequence was used as a sub-carrier. Finally, four different types of sub-carriers(square wave, sawtooth wave, sine wave, and pseudo-random sequence wave) were used for simulation studies with the different water qualities and emission pulse widths. The results show that the pseudo-random sequence has the best performance in improving the contrast of the target.