Physical processes within the diurnal cycle of the upper ocean in the Pacific Equatorial Undercurrent are investigated based on observations at 0¿/140 ¿W of April 1987. The cycle extended below the surface mixed layer into the pycnocline, where nighttime maxima and daytime maxima occurred in turbulent dissipation rates &egr;, fine-scale shear variance, and in ''large-scale,'' low-frequency zonal shear, buoyancy frequency, and gradient Froude number. The time-of-day average &egr; varied by a factor of 40 at 20 m, near the base of the mixed layer. Its night/day ratio decreased with increasing depth, the diurnal signal extending to 45--60 m, compared to nighttime mixed layer depths of 10--25 m. The daily variation of &egr; extended throughout the layer of high shear and high gradient Froude number Fr, above the Undercurrent core, being cut off where the large-scale Fr dropped below 1. The diurnal cycle of &egr; remained unaffected by changes in the large-scale shear and stratification. The nighttime fine-scale shear variance in the 5--10 m vertical wavelength band exceeded daytime minima by a factor of 2 on average, the daily variation decaying rapidly with increasing depth. Turbulent overturns were smaller than 5 m, so that we suspect that the fine-scale shear was related to internal waves. Fine-scale shear was large enough to be a factor in local shear instability. A zone some 20 m thick below the mixed layer showed weak nighttime maxima in the large-scale, low-frequency zonal shear, stratification, and Froude number. We suspect that these variations were a product of turbulent mixing. They could become a discriminative tool in a future comparison of our observations with upper ocean models. The application of such models is encouraged by indications of a local control of the upper ocean heat budget by the surface heat flux. In apparent response to a weaker Undercurrent, stronger stratification, and weaker trade winds, mean and nighttime dissipation rates were lower in 1987 than in November 1984. The night/day ratio, however, was larger than 1987 owing to the absence of daytime high-&egr; events. ¿ American Geophysical Union 1994