Underwater wet welding processes with minimal energy consumption and high efficiency is the future goal for researchers in the field. Al/CuO exothermic mixtures in consumables for land welding process can improve welding process stability and decrease the electrical dependence of the welding process. To confirm the beneficial effects of Al/CuO thermite and gain a better understanding of metallurgical properties of the thermite welds in underwater environment, this study investigated underwater wet self-shielded flux-cored arc welding (FCAW-S) of high-strength low-alloy steel with highly exothermic Al/CuO mixture. The effects of Al/CuO thermite on arc stability, weld metallurgical behavior and melting characteristics of flux-cored wire were clarified. The ratio of chemical heat in the flux to the heat required to melt welding wire increased from 4.7% to 38.4% with the addition of Al/CuO, potentially accelerating the melting of flux-cored wires. The arc stability with thermite addition was superior to that without the addition of thermite. The presence of copper as a result of metallurgical reactions had a substantial impact on metallurgical behavior of underwater wet welds. The ferrite weld was a non-equilibrium Cu supersaturated solid solution, which increased the microhardness and tensile strength of wet welds. The measured cooling time proved that the incorporation of Al/CuO had the capacity to reduce cooling rate. The incorporation of 50 wt% thermite yielded a 7.8% increase in welding process efficiency compared to the base formulation. Current work provided an important direction for the development of a chemically self-heating flux-cored wire.