This paper presents simulations of the Adriatic Sea using the DieCAST model applied on a 1.2--min grid (about 2--km resolution). The simulations resolve the mesoscale variability because the grid size falls below the first baroclinic deformation radius (about 5--10 km) and DieCAST has very low horizontal dissipation. The model is initialized with seasonally averaged temperature and salinity data and forced with climatological winds and surface buoyancy fluxes (both heat flux and evaporation minus precipitation). River discharges are varied daily according to a perpetual year for every river, and the open-boundary conditions at Otranto Strait are obtained by nesting in two larger-scale models. The present simulations demonstrate that the DieCAST model allows mesoscale instabilities to develop at length scales of 5--20 km and over time scales of a few days. The simulated variability exhibits pronounced similarities with the actual mesoscale variability, in terms of location, nature and temporal evolution of the features. Meanders, swirls and eddies are noted along the relatively smooth Italian coast while offshore jets and filaments better describe the mesoscale activity along the more rugged coast of Croatia. In sum, DieCAST is highly suitable for the study of mesoscale variability in the Adriatic Sea. The present simulations also show that the seasonal hydrography of the Adriatic Sea is intrinsically unstable to mesoscale perturbations, and that the mesoscale variability along the Italian coast is the result of baroclinic instability of the Western Adriatic Current. It is shown how the properties of this instability are related to the local bottom topography.