A three-dimensional hydrodynamic model is developed to study the circulation in the Arabian Gulf. The model contains realistic basin geometries and bathymetries of the Arabian Gulf and a good portion of the Gulf of Oman and is driven by monthly climatological winds, evaporation, and net ocean heat gain in both gulfs and the Shatt-al-Arab discharge. It is found that the cyclonic circulation in the southern portion of the gulf is primarily driven by the evaporation-induced freshening from the Strait of Hormuz. In the northwestern corner of the gulf, the Shatt-al-Arab discharge maintains the cyclonic circulation, which would otherwise be anticyclonic. The northwestward intrusion of fresher water along the Iranian coast is weakened by northwesterly winds in winter but strengthens and extends almost to the head of the gulf in summer owing to the warming of the Gulf of Oman waters, the development of the summer thermocline in the Arabian Gulf, and diminishing winds. The southward coastal current along the Arabian coast is most prominent between the head of the gulf and Qatar. The model also predicts a strong southward coastal jet east of Qatar which is primarily wind driven. No similar coastal jet can be developed in the Gulf of Salwa, west of Qatar. ¿ American Geophysical Union 1992