On the basis of the recently obtained hydrographic data in the South China Sea, the improved Princeton Ocean Model with a generalized topography-following coordinate system is used to study the circulation in the region during summer 2000. Several sensitivity experiments are carried out to achieve reasonable model parameters for the South China Sea (SCS). It is shown from the resting stratification experiments that the generalized topography-following coordinate scheme is better than the standard sigma grid scheme for reducing the pressure gradient errors. The combination of sea surface height anomaly derived from TOPEX/Poseidon and numerical results with both diagnostic and semidiagnostic simulations provides a consistent circulation pattern for the SCS in August, and the main circulation features can be summarized as follows: (1) There is a notable anticyclonic warm eddy southeast of Vietnam with a horizontal scale of ~300 km, and there is a cyclonic cold eddy. The simultaneous existence of these cold and warm eddies is one of the important circulation characteristics in the SCS during summer 2000. (2) A secondary cold eddy is found east of Vietnam. (3) The northwestern part of the SCS is dominated by an anticyclonic circulation system. (4) There is also a secondary warm eddy southwest off the Luzon Island. (5) A cyclonic eddy is found west off the Borneo Island. (6) A western intensification phenomenon obviously occurs in the SCS. The dynamical mechanisms of the above-mentioned circulation pattern in the SCS are the interaction between the wind stress and bottom topography and the joint effect of baroclinicity and relief.