An analytical method was proposed to analyze the radiation and diffraction of water waves by a bottom-mounted circular cylinder in a two-layer fluid. Analytical expressions for added mass and damping coefficients, as well as the wave excitation forces of the circular cylinder were obtained by an eigenfunction expansion method. The hydrodynamic forces on the bottom-mounted circular cylinder in a two-layer fluid include not only the added mass and damping coefficients, but also the wave forces of the surface and internal-wave modes. This is different from the case of a homogenous fluid. Some examples were given, showing that density stratification can have a relative large effect on these hydrodynamic forces over a wide range of frequencies. An analytical method was proposed to analyze the radiation and diffraction of water waves by a bottom-mounted circular cylinder in a two-layer fluid. Analytical expressions for added mass and damping coefficients, as well as the wave excitation forces of the circular cylinder were obtained by an eigenfunction expansion method. The hydrodynamic forces on the bottom-mounted circular cylinder in a two-layer fluid include not only the added mass and damping coefficients, but also the wave forces of the surface and internal-wave modes. This is different from the cases of a homogenous fluid. Some examples were given, showing that density stratification can have a relative large effect on these hydrodynamic forces over a wide range of frequencies.