We studied coastal sea floor terraces in parts of the Baltic Sea using various types of sonar data, sediment cores, and video. Terraces (~1 m high, > 100 m long) are widespread in depths < 15 m and are formed in glacial clay. Our study supports an origin from groundwater flow through silty layers, undermining overlying layers when discharged at the sea floor. Submarine groundwater discharge like this may be a significant source of freshwater to the Baltic Sea that needs to be studied further.