Nearshore variability of the thermocline depth and associated baroclinic currents at Sydney, New South Wales are analyzed for the locally and remotely forced components. Summer and winter data acquired in 65 m of water 3.5 km from the coast include thermistor string and current meter measurements. Cross-spectral analyses of the data are interpreted with reference to the free and forced modes of a simple two-layer frictional shelf model. Subinertial frequency (~40 day-21 hour period) baroclinic variability appears to be locally forced, in contrast with the barotropic variability which is principally remotely forced and acts as one of the local forcing agents of the baroclinic variability through bottom Ekman layer dynamics. The local wind stress appears to be the more important forcing term, despite having less weather band variance than the bottom stress. Strong winds at Sydney are usually from the south and hence lead to downwelling, while bottom stress is responsible for the rarer upwelling events. Near-inertial variability is substantially inhibited at the study site except during winter when the internal Rossby radius becomes comparable to the distance from the coast. Superinertial frequency (to 6-hour period) baroclinic variability is dominated by standing internal Poincar¿ waves, the principal energy source of which is presumed to be tidal currents over the outer shelf. The existence of a standing wave pattern implies that little dissipation occurs upon reflection at the coast. ¿ American Geophysical Union 1992