In this paper, we present a set of algorithms to enable the development of inexpensive hyperspectral sensors capable of estimating tissue oxygenation for wound monitoring. Estimation is conducted using the extended modified Lambert–Beer law, which has previously been proven robust to differences in melanin concentration. We introduce a novel wavelength selection algorithm that enables the estimation to be performed with high accuracy using only a small number (5–10) of wavelengths. Validation performed with Monte Carlo simulation data resulted in prediction errors <1%, with no significant differences among various skin types, for as few as five wavelengths under conditions representing both high precision instrumentation and more cost-effective sensors designed with inexpensive LEDs and/or filters. Validation with in vivo data collected from an occlusion study with 13 Asian volunteers showed statistically significant separation between the estimates for the at-rest and arterial occlusion states. Additional stability testing proved the proposed algorithms to be robust to small changes in the selected wavelengths as may occur in a real LED due to manufacturing tolerances and temperature fluctuations. This work concluded that the development of an inexpensive hyperspectral device for wound monitoring in all skin types is feasible using just a small number of wavelengths.