The upper continental margin of the Beaufort Sea, north of Alaska, is underlain by a strong bottom simulating reflection (BSR) that lies 300 to 700 m beneath the seafloor and corresponds to the phase boundary between interstitial water and natural gas below and solid gas hydrate above. BSRs of similar origin are common worldwide, where they are usually interpreted to mark the base of gas hydrate-bearing clastic sediment, with or without underlying free gas in the sediment. Surprisingly little is known about the origin of these strong reflections. In this paper we analyze the contrasting physical properties which produce BSRs by comparing synthetic BSR amplitudes and waveforms for varying source-receiver offsets with multichannel seismic reflection data across the well-developed BSR of the Beaufort Sea. In order to discriminate whether free gas is present under the BSR or not, it was necessary to supplement near-vertical incidence data with prestack offset data. The amplitude-versus-offset (AVO) analysis indicates that the BSR is produced mainly by the existence of free gas in the clastic sediments beneath the BSR. The zone of free gas is, based on vertical incidence synthetics, estimated to be thinner than 11--16 m. It is possibly thicker than 16 m if the gas concentration decreases with depth. Saturation of gas hydrate in the sediment above the BSR is tentatively estimated from the AVO modeling to be less than 10% of the pore volume. ¿ American Geophysical Union 1995