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Tropical Cyclone (TC) Olwyn travelled along the coast of Ningaloo Reef in northwestern Australia as a Category 3 TC during 12–13 March 2015 with sustained wind speeds of over 130 km h−1 and significant wave heights on the forereef reaching 6 m. Observations from TC Olwyn showed that, contrary to typical wave transformation patterns across a coastal reef-lagoon, under the TC conditions there was a substantial shoreward increase of wave height. This unusual pattern was primarily due to strong local wind wave generation under the extreme wind conditions, despite the lagoon itself being relatively small (order 1 km wide) and shallow (order 1 m depth). Two common types of coastal numerical wave models that include either wave growth (i.e. the phase-averaged model SWAN) or infragravity waves (i.e. the surfbeat resolving model XBeach), but not both processes, were used to assess the capabilities of numerical models to predict the cyclone-induced hydrodynamics. Model results showed that wave conditions in the lagoon and at the shoreline were dominated by locally-generated wind waves, with the reef efficiently dissipating the large incident waves offshore. The infragravity waves in the lagoon were only of secondary importance during the TC compared to the locally-generated sea-swell waves. Although both the phase-averaged (SWAN) and surfbeat-resolving (XBeach) models were able to predict some of the local hydrodynamic responses, for this specific site and storm, the use of a phase-averaged model yielded the most accurate predictions of the hydrodynamics given that it included wind wave growth. However, because the influence of infragravity waves cannot be neglected in reef environments in general, these results emphasize the need for a more general modeling approach that requires the addition of wind wave growth formulations into surfbeat- or fully-phase resolving classes of numerical wave models and/or the addition of an infragravity wave formulation in spectral wave models.