Many countries including India are frequently affected by the natural disasters like floods. In general, predicting natural disasters accurately is very difficult, but advanced technologies can be utilized to come out of such difficulties or to reduce the impact of natural disasters. Satellite image processing is one of the efficient ways to detect water bodies in earth regions which may help the agriculture industry or to identify the flooded regions. In this paper, we propose a scheme to identify the water bodies from the satellite images which will be useful for various applications. During our research, we have created a set of water body images by cropping satellite images. The properties of the water body regions analyzed using an algorithm and computed a set of possible threshold values for the pixels representing the water bodies. The threshold values obtained from the analysis of ‘water body images’ are used in the proposed algorithm to identify water bodies in any given image. A sequence of morphological operations is introduced to refine the results that are obtained through pixel color component analysis. The result analysis is carried out on a set of satellite images and it achieved good results.