In this paper, we analyze the problem of acoustic ranging between sensor nodes in an underwater environment. The underwater medium is assumed to be composed of multiple isogradient sound speed profile (SSP) layers where in each layer the sound speed is linearly related to the depth. Furthermore, each sensor node is able to measure its depth and can exchange this information with other nodes. Under these assumptions, we first show how the problem of underwater localization can be converted to the traditional range-based terrestrial localization problem when the depth information of the nodes is known a priori. Second, we relate the pair-wise time of flight (ToF) measurements between the nodes to their positions. Next, based on this relation, we propose a novel ranging algorithm for an underwater medium. The proposed ranging algorithm considers reflections from the seabed and sea surface. We will show that even without any reflections, the transmitted signal may travel through more than one path between two given nodes. The proposed algorithm analyzes them and selects the fastest one (first arrival path) based on the measured ToF and the nodes’ depth measurements. Finally, in order to evaluate the performance of the proposed algorithm we run several simulations and compare the results with other existing algorithms.