We use a three-dimensional primitive equation ocean model to study the formation of Levantine Intermediate Water (LIW), the characteristic intermediate water mass of the Mediterranean Sea. The model is forced by atmospheric monthly climatological values and incorporates a realistic air-sea interaction scheme. The cyclonic Rhodes gyre, a permanent general circulation feature of the Levantine basin, is found to be the unique formation site under these mean climatological conditions. The convection event has a duration of 2 months (February-March), and the estimated annual mean formation rate is 1.2 Sv. Using two different horizontal resolutions, an eddy-resolving (5.5 km) and a non-eddy-resolving (11 km) grid, we are able to make comparative experiments on the influence of eddy dynamics on the convection process. The results indicate that baroclinic eddies formed at the periphery of the cyclonic convection area control the formation process through horizontal advection of buoyant water from the periphery toward the center of the gyre. This mechanism reduces the extent and duration of the LIW formation event. The large number of small-scale and mesoscale baroclinic eddies that dominate the flow field at intermediate depths, together with the Asia Minor Current, are responsible for the spreading of the newly formed LIW, mainly in zonal direction. ¿ 1998 American Geophysical Union