This paper discusses oceanographic observations obtained in and near Jervis Bay, a small coastal embayment of approximately 124 km2 situated on the New South Wales coast, during a series of measurement programmes spanning three years. Various mechanisms that drive water circulation within the bay and water exchange between the bay and the adjacent continental shelf are discussed. Currentmeter data from within the bay show surprisingly little correlation with the wind. Currents are characterized by persistent flows in one direction for periods of months, and it is suggested that influences from the shelf are responsible for driving the bay circulation. Flow through the bay entrance is weakly correlated with the wind at a period of around eight days, with near-surface inflow on the southern side of the entrance being in phase with deeper outflow on the northern side and vice versa. The shelf waters are well known for their coastally trapped waves. These have the potential to oscillate vertically the density surfaces on the shelf on a time scale of around eight days, and observations indicate that these waves are an additional mechanism driving circulation in the bay. The shelf waters are influenced by the warm East Australia Current and its eddies, and this appears to maintain a density contrast between the bay and the shelf for most of the year, with the shelf waters being less dense, which may be an additional mechanism driving bay circulation. Current-meter data from the bay entrance show a persistent northward current component in contrast to the strong southward flow of the East Australia Current on the shelf. Conductivity-temperature- depth data reveal cold, dense water flowing out of the bay during periods of strong winter cooling and the effects of warm eddies pushing warm water into the bay and displacing cold deeper water away from the bay. The heating/cooling cycle of the bay appears to be influenced by advection processes on the shelf as well as by air/sea heat and radiation exchanges.