Photoplethysmography (PPG) is a commonly used in determining heart rate and oxygen saturation (SpO2). However, PPG measurements and its accuracy are heavily affected by the measurement procedure and environmental factors such as light, temperature, and medium. In this paper, we analyzed the effects of different mediums (water vs. air) and temperature on the PPG signal quality and heart rate estimation. To evaluate the accuracy, we compared our measurement output with a gold-standard PPG device (NeXus-10 MKII). The experimental results show that the average PPG signal amplitude values of the underwater environment decreased considerably (22% decrease) compared to PPG signals of dry environments, and the heart rate measurement deviated 7% (5 beats per minute on average. The experimental results also show that the signal to noise ratio (SNR) and signal amplitude decrease as temperature decreases. Paired t-test which compares amplitude and heart rate values between the underwater and dry environments was performed and the test results show statistically significant differences for both amplitude and heart rate values (p < 0.05). Moreover, experimental results indicate that decreasing the temperature from 45 °C to 5 °C or changing the medium from air to water decreases PPG signal quality, (e.g., PPG signal amplitude decreases from 0.560 to 0.112). The heart rate is estimated within 5.06 bpm deviation at 18 °C in underwater environment, while estimation accuracy decreases as temperature goes down.