TOPEX/Poseidon (T/P) altimeter data were used to derive time-varying circulation and eddies over the South China Sea (SCS) for 1993--1999. Large variabilities of sea surface heights and dense distribution of eddies were found to occur along a band across the SCS basin. A cross-over method is introduced to compute pointwise velocity components. The T/P-derived circulations and eddies are consistent with the drifter results from the World Ocean Circulation Experiment data center. (1) Because of monsoons, the SCS circulation is largely cyclonic in winter, is largely anticyclonic in summer, and is modulated interannually by El Ni¿o-- Southern Oscillation. (2) Both cold- and warm-core eddies were found in the waters east of Vietnam, west of Luzon, and west of the Luzon Strait, but their times of occurrence and the way they evolved vary interannually. (3) The reversal of the alongshore currents east of Vietnam was in complete accordance with wind stress. The locations and kinematic properties of eddies over SCS were estimated by the least squares method. The averaged vorticities of the cold- and warm-core eddies are 1.684¿10-4 and -1.738¿10-6 rad s-1, respectively, and the shearing and stretching deformations are one thousandth of the vorticities. The angular velocity of eddy decreases with increasing radius. Coherence analysis suggests that the interannual and seasonal variations of circulation are largely due to wind stress, and the semi-annual variation is largely due to wind stress curl. The angular velocities of eddies over the central SCS basin are coherent with the magnitudes and signs of wind stress curl. The seasonal steric anomaly was also computed, and its spatial pattern and scale are quite different from those of circulation and eddy. ¿ 2000 American Geophysical Union