Proximity magnetic sensor is able to detect the object target accurately in close range and it has been widely used in the underwater guided weapon system because there is no countermeasures from the target. In order to increase the damage of target by shock wave due to explosion of the underwater guided weapon system, the maximum detection range of the proximity magnetic sensor needs to be increased. In this paper, we describe the techniques of the optimum transmitting and receiving coils design using the Finite Element Method for the output power enhancement of the transmitter and the sensitivity improvement of the receiver. Finally, the proposed design techniques of the transmitter and the receiver were verified using a experimental setup and a prototype.