Observations of temperature and salinity distributions and currents have been combined with numerical simulations to investigate the response of a coastal embayment to atmospheric cooling during winter. The field experiment, including current meter mooring, conductivity-temperature-depth (CTD) surveys, and weather monitoring, was carried out in Jervis Bay, New South Wales, Australia, during the period of July to October 1996. The bay is small enough that a synoptic CTD survey can be achieved over a period of 6 hours but still large enough that Coriolis effects are important. During a cooling event, vertical convection and surface wind stress combined to produce a well-mixed water column. Continued cooling produced cold, dense water in the shallow regions of the bay and could be identified as a tongue of cold bottom water flowing out of the bay onto the adjacent shelf. The cold outflow produced a surface inflow to the bay of warmer shelf water, causing the bay waters to restratify. The response has been modeled using the three-dimensional Princeton Ocean Model with a prescribed surface heat flux based on meterological observations. Following a period of cooling, the model produced a stronger anticyclonic gyre at the surface and a weaker cyclonic gyre nearer the bottom. As the cold bottom water flowed out of the bay, warm shelf water entered at the surface, and the anticyclonic gyre was replaced by two counter rotating gyres: cyclonic in the northern half and anticyclonic in the southern half of the bay. In order to achieve a quantitative agreement between the model and observations, including the restratification following the cooling event and flow reversal associated with the change from anticyclonic to cyclonic circulation in the northern half of the bay, the surface heat fluxes needed to be artificially increased to compensate for excessive mixing in the model. The model results predicted a flushing time of order 1 week, depending on the duration and magnitude of the surface cooling and the initial conditions in the bay. ¿ 1999 American Geophysical Union