The effect of seafloor topographic variations on controlled-source electromagnetic (CSEM) responses is investigated using a finite-difference modeling approach for both petroleum and gas-hydrate exploration scenarios. In a deepwater reservoir model, distortions in the inline electric field responses are mainly due to galvanic effects, particularly at long transmitter-receiver (Tx-Rx) offsets, and are characterized by persistent short-wavelength anomalies at all Tx-Rx offsets in the amplitude profiles. In a shallow-water reservoir model, the contribution of inductive effects to bathymetric distortions is large at short Tx-Rx offsets compared to the deepwater case, whereas at long offsets, the distortion pattern is mainly determined by the source-receiver geometry relative to the sea surface because of the airwave effect rather than by the resistivity variations associated with the seafloor topography. A simple correction technique, which is an extension of the topographic correction procedure for magnetotelluric data, is effective in removing the bathymetric distortions for the deep marine case, but cannot be used for the shallow-water case because of the airwave effect. For a gas-hydrate exploration model, it is shown that the bathymetric response can be large enough to mask the target response, because higher frequencies and shorter offsets need to be used to detect the shallow targets. However, the modeling study suggests that the shallow target response can be separated from the bathymetric distortions using the correction method.