Subsurface pressure gauge has many advantages in measuring a wide range of wave spectra in coastal waters from wind waves to long waves. However, a shortcoming of the gauge is related to the difficulties in recovering surface wave spectra from subsurface pressure records. In this study, the effect of current on the pressure transfer function of the pressure gauge, and hence on the surface wave energy spectrum, was investigated by analyzing the subsurface pressure data based on the linear wave theory. For this purpose, laboratory experiments were carried out in a wave-current flume. Subsurface pressure records, as well as the surface elevation data, were obtained simultaneously under different wave and current conditions. Pressure transfer functions were obtained and compared with those estimated from the linear wave theory, both with and without inclusion of the current-effect. It was established that wave spectra obtained from subsurface pressure gauge were in closer agreement with those from surface wave gauge when current-effect on the pressure transfer function was taken into consideration for analysis.