The nearshore circulation and exchange processes during summer stratification and certain episodic events like upwelling and downwelling have been examined using a time series data of horizontal velocity and temperature profiles in Lake Ontario. The primary peak of spectral energy of currents and temperature for the summer season is located at a period of 10--12 days corresponding to the large-scale response of the lake due to meteorological forcing and the propagation of internal Kelvin waves. A secondary peak of spectral energy of coastal currents is situated near the inertial frequency band. Each upwelling and downwelling episode along the western Lake Ontario has lasted for nearly 4--6 days under the influence of prevailing winds. Currents associated with downwelling cycles are slightly stronger than currents associated with upwelling events. Although the kinetic energy associated with alongshore currents is generally higher, cross-shore flow exhibited higher energy at middle and lower levels during these episodes. The alongshore horizontal exchange coefficients are generally higher than the cross-shore component. However, during upwelling episodes, horizontal exchange coefficients are reduced in the surface layers and increased in the bottom layers. Full upwelling events are characterized with weak static stability and reduced vertical current shear in surface layers. Near bottom layers are affected by intense turbulence associated with increased vertical current shear. During downwelling events with migration and intersection of the thermocline with the bottom, vertical exchange coefficients are relatively small due to weak turbulent activity. ¿ 2001 American Geophysical Union