Abstract This paper describes ultrasonic transmission techniques for sensor signals transmitted through water-filled pilot pipes for underground microtunneling systems. Underwater ultrasonic waves are used for transmitting the orientation and location signals of a remote-controlled machine. We have investigated the relationship between ultrasonic transmission loss and frequency with propagation distance in water-filled pipes. Digital signals can be transmitted at 100 bps for more than 50 m in 80-mm-diameter steel pipes by using underwater ultrasonic pulse waves above 300 kHz. A compact prototype ultrasonic transmitter and receiver were developed, making it possible to transmit and receive 8-bit signals through flowing water in the pilot pipes by processing their signal waveforms. Field trials demonstrated a range of signal transmission of pitching angle data over a 40-m distance for an actual compact microtunneling system.