Abstract The Gulf of Papua has the shape of a half-moon of radius of about 200 km and mean depth <50 m. The freshwater inflow is large, about 15,000 m 3 s −1 with little seasonal variation. The entire Gulf is stratified in salinity in the top 20 m. The halocline, sharpened by strong winds, inhibits tidal mixing in the Gulf, even in shallow coastal waters where tidal currents are >1 m s −1. The dominant M 2 tide propagates from the Coral Sea through the Gulf to enter both Torres Strait and the large estuaries of Papua New Guinea. The low-frequency currents have, in costal waters, little vertical shear associated with the salinity stratification, but, at the shelf break, a strong vertical shear in the well-mixed layer typically 100 m thick. A dominant forcing of the circulation in the Gulf is the eastward-flowing Coral Sea Coastal Current in the Northwest Coral Sea. This current appears to generate a counter-clockwise rotating eddy in the Gulf. The wind fluctuations result in the brackish water leaving the Gulf alternatively at its western and eastern sides. The residence time of river runoff in the Gulf, estimated using a three-dimensional hydrodynamic model, is about 2 months and this estimate agrees with that from freshwater budget estimates. Brackish water intrudes in the Torres Strait where tidal mixing maintains vertical homogeneity. The tidal mixing front is located near the northern tip of the Warrior Reefs and the intrusion is strongest in the monsoon season.