The application of the marine controlled-source electromagnetic (CSEM) technique for shallow-water hydrocarbon exploration is challenged by the effect of an airwave that masks the response from the reservoir at depth. We applied Gauss–Newton-based 3D inversion method to synthetic CSEM and magnetotelluric (MT) data to demonstrate the capability of 3D inversion to recover thin resistive targets in shallow-water environments. The experiment on the model with water depth of 300 m shows that the target signals at 0.25 Hz are significant enough to resolve the reservoir at a burial depth of 1 km for the given noise level (6% of the electric-field amplitude). For the 100-m water depth case, the high-resistivity zone recovered is located much deeper and thicker than the true reservoir, suggesting that the airwave component obscures the target signal more seriously. However, inverting inline and broadside data together or adding inline data at a different frequency (0.1 Hz) is quite effective in improving the resolution to the thin resistive target and more so than simultaneously inverting inline CSEM and MT data.