To address the challenges of the parameterization of ocean color inversion algorithms in optically complex waters, we present an adaptive implementation of the linear matrix inversion method (LMI) [J. Geophys. Res.101, 16631 (1996)], which iterates over a limited number of model parameter sets to account for naturally occurring spatial or temporal variability in inherent optical properties (IOPs) and concentration specific IOPs (SIOPs). LMI was applied to a simulated reflectance dataset for spectral bands representing measured water properties of a macrotidal embayment characterized by a large variability in the shape and amplitude factors controlling the IOP spectra. We compare the inversion results for the single-model parameter implementation to the adaptive parameterization of LMI for the retrieval of bulk IOPs, the IOPs apportioned to the optically active constituents, and the concentrations of the optically active constituents. We found that ocean color inversion with LMI is significantly sensitive to the a priori selection of the empirical parameters g0 and g1 of the equations relating the above-surface remote-sensing reflectance to the IOPs in the water column [J. Geophys. Res.93, 10909 (1988)]. When assuming the values proposed for open-ocean applications for g0 and g1 [J. Geophys. Res.93, 10909 (1988)], the accuracy of the retrieved IOPs, and concentrations was substantially lower than that retrieved with the parameterization developed for coastal waters [Appl. Opt.38, 3831 (1999)] because the optically complex waters analyzed in this study were dominated by particulate and dissolved matter. The adaptive parameterization of LMI yielded consistently more accurate inversion results than the single fixed SIOP model parameterizations of LMI. The adaptive implementation of LMI led to an improvement in the accuracy of apportioned IOPs and concentrations, particularly for the phytoplankton-related quantities. The adaptive parameterization encompassing wider IOP ranges were more accurate for the retrieval of bulk IOPs, apportioned IOPs, and concentration of optically active constituents.