A three-dimensional, regional coupled atmosphere-ocean model with full physics is developed to study air-sea interactions during winter storms off the U. S. east coast. Because of the scarcity of open ocean observations, models such as this offer valuable opportunities to investigate how oceanic forcing drives atmospheric circulation and vice versa. The study presented here considers conditions of strong atmospheric forcing (high wind speeds) and strong oceanic forcing (significant sea surface temperature (SST) gradients). A simulated atmospheric cyclone evolves in a manner consistent with Eta reanalysis, and the simulated air-sea heat and momentum exchanges strongly affect the circulations in both the atmosphere and the ocean. For the simulated cyclone of 19--20 January 1998, maximum ocean-to-atmosphere heat fluxes first appear over the Gulf Stream in the South Atlantic Bight, and this results in rapid deepening of the cyclone off the Carolina coast. As the cyclone moves eastward, the heat flux maximum shifts into the region near Cape Hatteras and later northeast of Hatteras, where it enhances the wind locally. The oceanic response to the atmospheric forcing is closely related to the wind direction. Southerly and southwesterly winds tend to strengthen surface currents in the Gulf Stream, whereas northeasterly winds weaken the surface currents in the Gulf Stream and generate southwestward flows on the shelf. The oceanic feedback to the atmosphere moderates the cyclone strength. Compared with a simulation in which the oceanic model always passes the initial SST to the atmospheric model, the coupled simulation in which the oceanic model passes the evolving SST to the atmospheric model produces higher ocean-to-atmosphere heat flux near Gulf Stream meander troughs. This is due to wind-driven lateral shifts of the stream, which in turn enhance the local northeasterly winds. Away from the Gulf Stream the coupled simulation produces surface winds that are 5 ~ 10% weaker. Differences in the surface ocean currents between these two experiments are significant on the shelf and in the open ocean.