The 40-km-diameter Mj¿lnir crater in the Barents Sea was created by a meteoroid impact into a 400 m shallow sea about 142 Ma. We have used a multimaterial hydrocode with depth-depending target strength to model numerically the cratering and early modification stages of the Mj¿lnir impact. Our models are constrained by the observed crater morphology and structure. The best results were obtained for a composite target strength structure: very low strength for the upper 3 km of sedimentary rocks and gradual increase from 3 to 6.5 km depth before using strength values typical for granitic rocks at greater depths. The low strength of the target sediments at shallow depths led to exceptionally intensive slumping and gravitational collapse of the order of 2.0--2.5, considerably larger than the average expected values for typical terrestrial craters. As a result, we obtain a crater collapse in between simple and complex, where slumping and gravitational collapse counteract the crater floor uplift and lead to suppression and burial of the central high. The Mj¿lnir impact in a shallow sea was responsible for a major disturbance of the water column. Following the impact-induced outward water surge, large-amplitude tsunamis were formed, and the rapid resurge of seawater into the excavated crater transported large amounts of ejecta and crater wall material back into the crater, accounting for the redestribution of ejecta material and extensive infilling.