Permanently shadowed regions (PSRs) on the Moon, located near its north and south poles, are characterized by extreme cold and a lack of sunlight, creating conditions conducive to the trapping of volatiles such as water ice. The Moon’s axial tilt, which is nearly perpendicular to sunlight, results in these areas remaining perpetually dark and cold, allowing water ice to accumulate. This ice is crucial for future lunar exploration and potential human habitation. Research efforts, including the Chandrayaan-1 mission, have focused on detecting water ice within these PSRs. Chandrayaan-1, launched by the Indian Space Research Organization, utilized its Moon mineralogy mapper (M3) hyperspectral data to analyze the lunar surface. The M3 instrument was particularly effective in identifying spectral signatures indicative of hydration feature and ice molecules at the Moon’s north pole. The M3 hyperspectral images facilitated the analysis of water ice absorption features, and different techniques of image processing were applied to enhance the accuracy of the data. The spectral angle mapper (SAM) classification method was employed to map water ice deposits, and the Target Detection Wizard tool in ENVI software was used to validate the findings against reference spectra. Results from these studies indicate significant amounts of water ice may exist in the PSRs. The study effectively identified and classified water ice in the permanently shadowed regions of Erlanger Crater at the lunar North Pole using spectral angle mapper (SAM) and Thor Target Detection techniques. Spectral analysis from the Moon mineralogy mapper (M3) revealed water ice absorption features at 1.5 and 2.9 µm, validated by comparisons with the John Hopkins University spectral library. SAM classified water ice pixels with an angular value of 0.33 radians (19.26°), primarily around the crater’s rim and inner walls, while Thor Target Detection identified additional signatures across the region. This discovery not only enhances our understanding of the polar regions of the moon but also holds implications for future exploration missions.