A regional numerical model is developed for the mid-Chile shelf and ocean circulation (30¿S to 43¿S). The model is forced with mean summertime wind stress and transports from a global model. Over the first 10 days, deep (250--300 m) Peru Undercurrent (PUC) water is upwelled to depths of 170--270 m. After this time, upwelling by the steady winds is largely shut down and a 55-km-diameter cyclonic eddy is found to grow in deep water off Punta Lavapie. The mechanism for eddy growth is identified to be baroclinic instability of an initial offshore meander of the equatorward Chile Coastal Current (CCC). Over a period of more than 100 days, the onshore arm of the deep-water eddy upwells PUC water to depths of 150 m toward the shelf. A shallow headland eddy then sweeps this PUC water to depths of less than 50 m and into the Gulf of Arauco. The net upwelling of 200 m is the largest found for the region. Observational evidence is cited for the existence of the deep-water cyclonic eddy over a period of 4 months. A spatially intermittent PUC is also found to lie below the CCC. In agreement with observational studies, the model also predicts the existence of an offshore branch of the CCC that is directed to the northwest.