A 412-layer model with active thermodynamics and mixed layer physics is used to examine how salinity distributions forced by precipitation P minus evaporation E and by river runoff in the Bay of Bengal affect dynamics, thermodynamics, and mixed layer physics in the upper Indian Ocean. Each of the our active layers represents a distinct water mass type: the surface mixed layer, the seasonal thermocline (barrier layer in the tropics), the thermocline, and upper intermediate water. Waters are allowed to transfer between layers by interfacial velocities w1, w2, and w3. Velocity w1 parameterizes entrainment and detrainment from the surface mixed layer, and it is determined largely by Kraus and Turner <1967> physics. Velocity w2 is primarily a parametrization of subduction. In regions where precipitation is strong enough for P-E>0, forcing by P-E thins the surface mixed layer (layer 1) because of decreased entrainment, and thus chickens the seasonal thermocline (layer 2, a barrier layer). Additionally, surface currents generally strengthen, T2 warms considerably, and sea surface temperature (SST) increases somewhat, resulting in temperature inversions at some locations in the southern bay and eastern equatorial ocean. This forcing also causes large temperature changes in the thermocline (layer 3), primarily because of heating or cooling by anomalous subduction. During the Southwest Monsoon, forcing by inflow from Bay of Bengal rivers increases SST by 0.5¿--1 ¿C along the northeast coast of India. This is because coastal Kelvin waves driven by the Ganges-Brahmaputra River inflow suppress coastal upwelling there. During the Northeast Monsoon, fresh river water is carried southward by the East India Coastal Current (EICC), raising sea level along the coast and strengthening the EICC by 10 cm s-1. The river water decreases entrainment around the perimeter of the bay during winter, thereby thinning the surface mixed layer, increasing T2, and resulting in temperature inversions in the northwestern bay. River inflow also causes significant temperature anomalies in layer 3 by affecting subduction. ¿ 2001 American Geophysical Union