Numerical experiments are performed using an ocean general circulation model (OGCM) to assess the impact of the form of lateral mixing of momentum and tracers on the state of an equatorial ocean. It is found that the large-scale structure of both the velocity and temperature fields are very sensitive to the imposed parameterization of lateral mixing in the model. With uniform values for the viscosity and diffusion coefficient across the domain, a decrease in these coefficients increases the activity of tropical instability waves (TIW), resulting in an increase in the sea surface temperature of the cold tongue, and thus overcoming the cold bias often found in ocean models of the equatorial Pacific. However, there is an associated increase in the strength of the Equatorial Under-Current (EUC) to unrealistic levels. It is found that the strength of the EUC can be limited, while little affecting the TIW activity, by applying an enhanced level of mixing in the vicinity of the equator. This enhanced mixing is used to model the effect of the observed interleaving of water masses across the equator. Both the level and distribution of eddy kinetic energy (associated with TIWs) varies with the level and orientation of the lateral mixing. An examination of the main energy conversion terms of mean to eddy energy reveals that both the barotropic and baroclinic energy conversion terms are important for the production of TIWs. The relative role of each of these conversion terms changes as the lateral mixing is decreased. At low levels of lateral mixing, barotropic instability is found to dominate the production of total eddy energy. Including enhanced mixing at the equator decreases this barotropic production, but surprisingly increases the baroclinic production away from the equator.