External defects in paprika fruit (Capsicum annuum, L. var. angulosum) directly impact their storage and marketability, potentially leading to internal decay and altering fruit appearance. However, automatically detecting various paprika defects, including cracks, scars, diseases, and bruises, poses a significant challenge due to variations in defect size and visual similarities among different types of defects. This study proposed a comprehensive, accurate, and rapid defect detection method utilizing hyperspectral imaging (HSI) alongside multivariate analysis and imaging technologies. The reflective surface of fruit poses a primary limitation to efficient defect detection using imaging technologies. Therefore, a polarized HSI visible–near-infrared (VIS-NIR, 397–1000 nm) system was developed, and over 500 paprika fruit with various types of defects were imaged using the developed system. Additionally, fruit were manually bruised in different sizes to ensure spectral data variability and measured every 12 hours for two days. Spectral data (over 4580 spectral data) from the regions of interest (ROIs) of the paprika fruit samples, including manually bruised fruit, were extracted. Subsequently, a partial least squares discrimination analysis (PLS-DA) model was developed to distinguish between normal and defective fruit. Remarkably, the developed model achieved an accuracy of over 99 % in predicting normal and defective fruit. Moreover, the chemical images generated enhance the inspection process. The successive projection algorithm (SPA) and variable importance in projection (VIP) were further utilized for critical band selection, yielding an accuracy of 93 % and 98 % in the prediction set, respectively. Furthermore, a classification algorithm based on analysis of variance (ANOVA) was employed to determine the optimal wavelength band ratios (F-values). This approach yielded an impressive accuracy rate of over 88.8 % and further enhanced the performance of the band ratio by an improved watershed segmentation algorithm (IWSA) to reach an accuracy of 91.3 % in multi-defect detection. These findings offer a practical and efficient solution for the external quality inspection of paprika fruit, particularly in cases with naturally occurring defects. By integrating hyperspectral imaging, PLS-DA, band selection methods, ANOVA-based classification, and IWSA, this comprehensive analysis provides a reliable and practical means for identifying and categorizing defects in paprika fruit, ultimately enhancing product quality and consumer satisfaction.