The effect of resolving relatively small islands in a third-generation wave model covering the whole North Atlantic is shown to have noticeable effects at long distances from the islands in addition to the local effects that have been reported earlier. To resolve the islands, a very fine grid is adopted locally, which is then nested in the overall model. The examples presented show the shadowing effect of Azores Islands for three specific wave conditions: when they come from the southwest, from the west, and from the northwest. The sheltering effect of the islands was demonstrated by a reduction of the significant wave height in the region on the leeward side of Azores Archipelago when comparing the wave model results with the island resolved and unresolved.