We present results from a detailed spectrophotometric analysis of the blue compact dwarf galaxy (BCD) Mrk 370, based on deep UBVRI broadband and Hα narrowband observations, and on long-slit and two-dimensional spectroscopy of its brightest knots. The spectroscopic data are used to derive the internal extinction and to compute metallicities, electronic density, and temperature in the knots. By subtracting the contribution of the underlying older stellar population, modeled by an exponential function, removing the contribution from emission lines, and correcting for extinction, we can measure the true colors of the young star-forming knots. We show that the colors obtained this way differ significantly from those derived without the above corrections and lead to different estimates of the ages and star-forming history of the knots. Using predictions of evolutionary synthesis models, we estimate the ages of both the starburst regions and the underlying stellar component. We found that we can reproduce the colors of all the knots with an instantaneous burst of star formation and the Salpeter initial mass function (IMF) with an upper mass limit of 100 Msolar. The resulting ages range between 3 and 6 Myr. The colors of the low surface brightness component are consistent with ages larger than 5 Gyr. The kinematic results suggest ordered motion around the major axis of the galaxy.