A computational fluid-structure interaction (FSI) approach was employed to assess the structural integrity of sandwich panels under air-backed underwater explosion (UNDEX) loading conditions. Square honeycomb core sandwich panels (300 × 250 mm) with a core relative density ranging from 3–10% were developed using mild steel, with identical 2 mm front and back face sheets. Two sandwich configurations were developed: (i) with varying core relative density and (ii) with varying core height with equivalent relative density. All simulations utilized the Finite Element (FE) Explicit Solver and a UNDEX algorithm, with shock factor variations from 0.42 to 0.73 at a constant standoff distance of 150 mm. Simulations revealed that the core relative density of the sandwich panels served as a predominant design variable. Dominant failure modes included front face sheet stretching, and core crushing, alongside front face sheet midpoint deflection. This numerical analysis demonstrates the potential of computational simulations to accurately predict the structural response of sandwich panels under extreme events like underwater explosions.