Detecting clouds in satellite imagery is becoming more important with increasing data availability, however many earth observation sensors are not designed for this task. In Satellite pour l'Observation de la Terre 5 (SPOT5) High Resolution Geometrical (HRG) imagery, the reflectance properties of clouds are very similar to common features on the earth's surface, in the four available bands (green, red, near-infrared and shortwave-infrared). The method presented here, called SPOTCASM (SPOT cloud and shadow masking), deals with this problem by using a series of novel image processing steps, and is the first cloud masking method to be developed specifically for SPOT5 HRG imagery. It firstly detects marker pixels using image specific threshold values, and secondly grows segments from these markers using the watershed-from-markers transform. The threshold values are defined as lines in a 2-dimensional histogram of the image surface reflectance values, calculated from two bands. Sun and satellite angles, and the similarity between the area of cloud and shadow objects are used to test their validity. SPOTCASM was tested on an archive of 313 cloudy images from across New South Wales (NSW), Australia, with 95% of images having an overall accuracy greater than 85%. Commission errors due to false clouds (such as highly reflective ground), and false shadows (such as a dark water body) can be high, as can omission errors due to thin cloud that is very similar to the underlying ground surface. These errors can be quickly reduced through manual editing, which is the current method being employed in the operational environment in which SPOTCASM is implemented. The method is being used to mask clouds and shadows from an expanding archive of imagery across NSW, facilitating environmental change detection.