Effective monitoring of coral reefs remains a major goal in marine ecology and conservation as these communities representing the most productive ecosystems and hosting approximately one third of all known marine species have been seriously threatened by various anthropogenic activities and climate change events. Space-borne reflectance data are commonly used to monitor coral reefs and improve their management practices, yet an effective use of such data remains a challenge due to a high level of spatial heterogeneity of coral reef communities and surrounding water environments. Thus, it is crucial to understand the optical properties coral reef environments and their influence on the spectral remote sensing reflectance. This study presents an optical model based on field and laboratory data that relates the inherent optical properties (IOPs, such as absorption and backscattering) of the water constituents (phytoplankton, suspended sediments, colored dissolved organic matter, water itself) and coral components (symbiotic + coralline algae) to remote sensing reflectance via the bidirectional quantity (f/Q) of the upwelling light field. The absorption and backscattering coefficients are parameterized as a function of the individual contributions of coral component (symbiotic and coralline algae) and water constituents and the bidirectionality factor f/Q is derived as a function of solar-sensor zenith angles and IOPs. The wider applicability of these parameterizations is tested in diverse water types (with chlorophyll-a concentration 0.07–1239 mg m⁻³, suspended sediment concentration 0.1–104 g m⁻³, absorption coefficient of colored dissolved organic matter 0.02 to 8.8 m⁻¹ at 412 nm). Modelled reflectance spectra were compared with in-situ data and Hydrolight radiative transfer simulations. For various coral reef species and water types, the modelled spectral reflectance and associated features across a spectral range of 400–750 nm showed good agreement with measured and simulated data within the error of 17%. The effect of strong attenuation of light by water which potentially affects and alters the spectral shapes and magnitudes of reflectance is further examined and discussed. This work will have significant implications for optical remote sensing of the coral reef ecosystems in diverse oceanic environments.