Oceanographic data collected in the Newfoundland marginal ice zone in March 1992 are analyzed to study the variation of mixed-layer properties across the ice zone. The mixed-layer depth decreases from 80 m in the interior of the pack ice to 25 m at the eastern ice edge over a distance of 120 km. In the open ocean without ice cover, the depth is considerably greater, 150~200 m. The temperature under the pack ice is near freezing. A sharp increase in both the temperature and salinity occurs across the ice edge. The variation of the mixed-layer properties is simulated by integrating a one-dimensional bulk mixed-layer model coupled to sea ice, from November 1991 to March 1992. The initial ocean conditions are obtained from an objective analysis of archived data of November 1991. The forcings are 6-hourly meteorological data from the European Centre for Medium-Range Weather Forecasts. Ice concentration and thickness are treated as prescribed functions of time extracted from daily ice maps since ice in the area is not locally formed. The model simulation is in good agreement with the observations. From the model results, a detailed analysis of the roles of wind stress, ice melt, surface cooling, and shortwave radiation in the water mass transformation of the upper ocean is carried out. There are large differences in the melt rate and water-ice heat flux between the times when ice enters the shelf and after the water has been cooled by the ice to near freezing: 15~20 cm d-1 and 500~700 Wm-2, and 0~2 cm d-1 and 20~50 Wm-2 respectively. A large portion of the heat in the water column is expended for ice melting from January to March. Calculations that use surface data such as surface wind and sea surface temperature without considering ice melt can underestimate the net ocean-to-air heat flux, especially at the eastern ice edge in March. ¿ 1998 American Geophysical Union