Yes, it is! Barotrauma has built-in modding tools such as the Submarine Editor and Character Editor, and it is fully integrated with the Steam Workshop, so installing mods other players have made is simple.
In addition to this, Barotrauma’s source code is public in the GitHub repository, which allows for considerable freedom in creating mods. However, modders should note that Barotrauma’s End User License Agreement does not allow distributing standalone versions of the game, meaning that you are allowed to use the source code to create mods and share the modded files with players, but not to share the entire game in a way that would allow players to play it without purchasing it on Steam.
If you are looking to get started with modding, check out the semi-automatically generated Barotrauma Modding guide. We update the doc as we have time, and you are encouraged to participate in updating the document as well. You can also ask questions about modding in the #baro-modding channel on Discord, or the Workshop Discussions forum on Steam.