The interaction of alongshore coastal currents with large headlands has been shown to increase the retention of planktonic organisms through the formation of headland eddies or upwelling shadows in their lee. This study investigates the circulation within Bodega Bay (in the lee of a small headland), in an upwelling region, and the potential for retention of plankton. During the upwelling season of 2004, time series of temperature and velocity were recorded throughout Bodega Bay, conductivity-temperature-depth (CTD) surveys were conducted, and surface drifters were released during upwelling, downwelling, and relaxation conditions. Postlarval settlement was monitored daily over two periods coinciding with CTD surveys. Under strong upwelling favorable conditions, wind-driven surface currents were equatorward both offshore and throughout the bay. However, there was significant current shear along the eastern shore of the bay where cold bottom waters move poleward, counter to the direction of the wind-driven surface flow. During downwelling and relaxation conditions, flow was poleward throughout the water column along the eastern shore of the bay. Postlarvae settled during all wind conditions, but greatest settlement was observed at the onset of upwelling favorable conditions. While no typical upwelling shadow is evident in the lee of the Bodega headland, subsurface recirculation driven by the alongshore flow past Bodega Head may facilitate the retention of plankton in the bay. Previous studies have generally focused on large headlands; however, it is likely that other small embayments in the lee of small headlands may also provide retention opportunities for planktonic organisms in upwelling regions.