Low-pass-filtered velocities obtained from surface drifters and surface geostrophic velocities estimated from TOPEX/Poseidon altimeter data have recently revealed a clear and robust seasonal cycle in the surface eddy kinetic energy (EKE) in the California Current (CC) <Kelly et al., 1998; Strub and James, 2000>. The seasonal cycle begins in spring when a surface-intensified baroclinic equatorward jet develops next to the coast in response to strong upwelling favorable winds. This jet, and a developing eddy field, then moves offshore during summer and fall. The EKE maximum associated with the jet progresses only as far as 127 ¿W, beyond which it decreases rapidly. This is a robust characteristic of the seasonal cycle that has been previously attributed only to an unspecified dissipation process. To investigate this aspect of the surface EKE, a multiyear simulation of the CC is carried out using the Dietrich/Center for Air-Sea Technology primitive equation regional ocean model <Dietrich, 1997>. The simulation accurately reproduces many aspects of the observed annual cycle, including the offshore propagation of the EKE at the surface. The model results indicate that the decrease of surface EKE west of 127 ¿W in the simulation is not due to dissipation but rather is caused by the vertical redistribution of EKE to the deep ocean. This redistribution occurs through the transformation of kinetic energy from the vertical shear flow to the vertical mean flow. The transformation is a nonlinear process inherently associated with the life cycle of baroclinically unstable waves, and in the CC, it effectively energizes the deeper ocean at the expense of the upper ocean. The process is also known to be important in the atmosphere <Wiin-Nielsen, 1962>. Taken together, the recent California Current observations and the new model results strongly suggest that the CC regularly supplies EKE to the deep waters of the eastern North Pacific. ¿ 2001 American Geophysical Union