Time series measurements of temperature, salinity and current at the sills and the rim of the Arkona Basin have been performed during the winter seasons 1998/1999 and 1999/2000 together with ship-based measurements of stratification and currents covering the whole Arkona Basin. The well-mixed brackish surface was separated from the stratified saline bottom water by a halocline at a mean depth of 30 m. The saline bottom water was contained in an up to 15 m thick pool filling the central part of the Arkona Basin. This stratification resulted in a 6 km wide Rossby radius and a phase velocity of 0.7 m/s for the first baroclinic mode. The mean stratification was disturbed by cyclonic geostrophic eddies with a characteristic radius equal to the first baroclinic Rossby radius and up- and downwelling processes in the coastal boundary layer. 90% of the variability of the vertical current profile can be described by the first and second EOF. The most pronounced feature of the current profile is the existence of an Ekman bottom friction layer found in both modes. The thickness of the Ekman layer of the barotropic mode is 10--15 m and that of the baroclinic mode is about 5m. The baroclinic circulation consists of a pulsating cyclonic motion in the bottom layer and an anticyclonic motion in the upper layer along the rim of the Arkona Basin, driven by the spilling of saline bottom water over the sills into the Arkona Basin. The saline bottom water is flowing as gravity current from the sills into the Arkona Basin which is in a first order balanced by gravity and the Coriolis force, whereas friction is smaller than the other two forces involved. The friction imposes a spiral motion into the center of the Arkona Basin where it contributes to the dense bottom water pool. The front of the dense bottom water moves with a phase speed of about 30 cm/s at the westerly rim and slows down to about 10 cm/s along the southerly and easterly rim of the Arkona Basin. Evidence was found that the dense bottom water plume mixes with the ambient water by wind induced entrainment in the vicinity of the sill. The main mixing mechanism of a propagating saltwater plume is mixing of the water ahead of its front with the bottom water behind the front by differential advection.