The seasonal cycle of water masses and sea ice in the Gulf of St. Lawrence is examined using a three-dimensional coastal ice-ocean model with realistic tidal, atmospheric, hydrologic, and oceanic forcing. The model includes a level 2.5 turbulent kinetic energy equation. A model simulation over 1997–1998 is verified against available data on sea ice, temperature, and salinity. The results demonstrate a consistent seasonal cycle in atmosphere-ocean exchanges and the formation and circulation of water masses and sea ice. The accuracy of radiative, momentum, and sensible heat exchanges at the sea surface, and the production of turbulent kinetic energy from winds and tides, are critical to the accuracy of the modeled circulation. The analysis of the mean error on near-surface temperature and salinity in the late summer and fall using standard bulk exchange coefficients and radiation (about 1°C too cold and 1 salinity unit too fresh) shows the tradeoff between tidal mixing at the head of the Laurentian Channel, and wind-driven circulation and mixing in the surface waters. The results suggest year-long stratification in the estuary and northwestern Gulf, with little mixing except near the head region, where relatively deep warmer waters are mixed to the surface during winter, and cold intermediate waters are efficiently withdrawn during summer. The results suggest that the summer cold waters found at intermediate depths in the estuary and northwestern Gulf are not formed in situ. A significant fraction of these waters enters through the Strait of Belle Isle in wintertime, eventually reaching the estuary within about 6 months.