In this paper, the IR and compass sensors for the underwater system were used. The walls of the water tank have been recognized and avoided treating the walls as obstacles by the bio-mimetic underwater robot. This paper is consists of two parts: 1.The hardware part for the IR and compass sensors and 2.The software part for obstacle avoidance algorithm while the bio-mimetic robot is swimming with the obstacle recognition. Firstly, the hardware part controls through the RS-485 communications between a microcontroller and the bio-mimetic underwater robot. The software part is simulated for obstacle recognition and collision avoidance based upon the data from IR and compass sensors. Actually, the bio-mimetic underwater robot recognizes where is the obstacle as well as where is the bio-mimetic robot itself while it is moving in the water. While the underwater robot is moving at a constant speed recognizing the wall of water tank as an obstacle, an obstacle avoidance algorithm is applied for the wall following swimming based upon the IR and compass sensor data. As the results of this research, it is concluded that the bio-mimetic underwater robot can follow the wall of the water tank efficiently, while it is avoiding collision to the wall.