Observations from the Frontal Air--Sea Interaction Experiment (FASINEX), indicating the presence of small-scale cold-core features in the North Atlantic Subtropical Convergence Zone, motivated a recent linear analysis of the instability of a geostrophically balanced mixed-layer front. The results of that analysis suggested that the instability would preferentially form small-scale cold-core edeies at finite amplitude. In the present study, the finite-amplitude evolution of the fastest growing mode of this nongeostrophic baroclinic instability is investigated numerically. The linear prediction of cold-core eddy formation is confirmed by the nonlinear calculation. There are large horizontal and vertical heat and potential vorticity fluxes associated with the developing disturbance. The heat flux is confined above the thermocline, in the region of sloping frontal isotherms that provide the energy source for the instability, but the potential vorticity fluxes are maximum 50--75 m deeeper and reach into the thermocline. A tongue of low-potential-vorticity fluid is advected 50--75 m downward along isopycnal surfaces from the cold side of the front into the thermocline at the mixed-layer base. The small-scale potential vorticity structure has similarities to estimates of the upper ocean potential vorticity field obtained previously from FASINEX observations. The calculations illustrate the role that frontal instabilities may play in the flux of heat and potential vorticity from the mixed layer into the thermocline. The evolution of the disturbance resembles baroclinic wave life cycles obtained in atmospheric models. ¿ American Institute of Physics 1995