Low-coherence interferometry (LCI) is a well-established optical method used for obtaining geometric measurements, suited for operating in nonideal environments as shown through its use in biomedical science, where it is referred to as optical coherence tomography. However, work on characterizing these technologies' ability to work in-situ within the area of manufacturing is yet to be demonstrated. This research is motivated by the need to develop robust sensors capable of operating in the harsh environment of manufacturing processes in near real-time, providing on-demand process control for the next generation of precise, and highly adaptive schemes of production. The evaluation of a common-path, lensless, spectral-domain, LCI-based sensor for measurements of step heights in air and in the nonideal operating environment of water is demonstrated. Calibration experiments have explored linearity of measurements over a 1-mm investigated axial range with deviations of the order of ±50  nm in air and ±100  nm in water. Step heights of 8, 7, 6, and 5  μm were measured in air and also with the sample and sensing probe submerged in water. Step heights in both media closely align with calibrated specifications given by the manufacturer demonstrating submicrometer accuracy and a precision of ±56  nm in air and ±76  nm in water.