On the basis of the Princeton Ocean Model, a robust diagnostic model is developed to calculate the residual currents in the Hiuchi-Nada, a semi-enclosed bay of the Seto Inland Sea. The input water temperature and salinity data are from six hydrographic surveys in 2002, and the model results in the summer show a clockwise eddy in the western part of the bay and an anticlockwise eddy in the eastern part. The magnitude of two eddies is ~10 cm/s. The modeled flow pattern is consistent with early observations derived from moored arrays. The two eddies are persistent throughout the summer because winds are usually weak and cannot influence their existence. The tide-induced residual currents are appreciable only in the close vicinity of the Kurushima Strait and Bisan Strait, the two straits connecting the bay to the other bays, and have little affect on the two eddies that are inside the bay. Thus the two density-driven eddies in the Hiuchi-Nada are the basic pattern of circulation in the summer. Using the calculated residual currents, we examined the intrusion route of waters from the Kurushima Strait and Bisan Strait with passive tracer experiments. The results show that the water in the Kurushima Strait intrudes into the bay mainly through the middle and bottom layers while the water in the Bisan Strait intrudes mainly through the surface layer. Furthermore, the tracer cannot reach the center of the anticlockwise eddy in the eastern part of the bay. This indicates that the eddy prevents water exchange between its center and outer edges and provides favorable conditions for the formation of oxygen-deficient waters in the central part of the eddy.