This study was conducted to identify the physical changes before and after the coastal reclamation and to study the effects of the reclamation activity with special focus on the biological status of the Penang waters using the Geographical Information Science application. The study area is in Penang waters. Landsat satellite images were analyzed using IDRISI Kilimanjaro and ArcGIS 10. The water quality analysis was carried out using water quality optics model developed by Lim Hwee San et al., (2009). The results showed that the concentrations of Total Suspended Solids (TSS) during the reclamation were high at 75 mg/L - 150 mg/L, exceeding National Water Quality Standards (NWQS), Department of Environment < 25 mg/L - 50 mg/1 for class I and II that are not suitable for nature conservation, threatens sensitive aquatic life and are not suitable for water use. After reclamation, the TSS concentration was found to decrease to 75 mg/L - 100 mg/L but still exceeded the NWQS. The concentrations of chlorophyll-a before the reclamation overall were as high as 7 mg/L - 9 mg/L while after reclamation, the concentration of chlorophyll-a in Penang waters was moderate at 5 mg/L - 7 mg/L. A statistical test was conducted to see the relationship between chlorophyll-a concentration with TSS, SST, amount of rainfall and tidal level using regression analysis. The analysis results showed that chlorophyll-a has a significant relationship with TSS, SST, amount of rainfall and tidal level. As a whole, coastal reclamation activities do caused declination of water quality, thus affecting the biological status of Penang waters.