To address the difficulty of obtaining real time-delay signals due to multipath effect in shallow water, an ultra-short baseline (USBL) device is developed for the object location, and a cross-correlation differential time-delay estimation method with available constraints is proposed for the USBL location in shallow water. Pulse selection and phase correction methods are used to estimate the differential time delay accurately for tracking and locating the object trajectory. The results of a lake experiment show that the trajectory location with the proposed method is smooth and stable, and has less wild points and high accuracy.