The development of bio-optical algorithms for estimation of phytoplankton pigment concentration (C) and chlorophyll a concentration (Chl a) from measurements of inherent optical properties or apparent optical properties, made by in situ or remote sensors is the main aim of the present work. This aim was achieved mainly by consideration of optical processes and interactions in the integrated natural system, including atmosphere, air/water interface and water body. The present work focuses on the Case 1, meso-oligotrophic waters of the Gulf of Aqaba (Eilat). The work is based mainly on the use of the extensive ocean optics literature, measurements in the Gulf and in the atmosphere nearby, developments in the sphere of radiative transfer theory and bio-optical modelling. During the study the following main problems and issues were considered: - Physical optics of the ocean, including radiative transfer theory - Solar irradiance and atmospheric transmittance models - In situ and remote sensing problems of the estimation of C and Chl a, including sensitivity analysis of inverse bio-optical models - Methods of solution of mathematically ill-posed (incorrect) problems.