An advanced ocean observatory has been established in Lunenburg Bay of Nova Scotia, Canada as part of an interdisciplinary research project of marine environmental prediction. The development of a high-resolution coastal circulation model is one of important components of the observatory. The model horizontal resolution is 60m and the vertical resolution is about 1 m. The coastal circulation model is used to simulate the semi-diurnal tidal circulation and associated nonlinear dynamics with the M2 forcing specified at the model open boundaries. The model is also used to simulate the storm-induced circulation in the bay during Hurricane Juan in September 2003, with the model forcing to be the combination of tides and remotely generated waves specified at the model open boundaries and wind stress applied at the sea surface. The model results demonstrate strong interactions between the local wind stress, tidal forcing, and remotely generated waves during this period. Comparison of model results with the surface elevation and current observations demonstrates that the coastal circulation model has reasonable skills in simulating the tidal and storm-induced circulation in the bay. An advanced ocean observatory has been established in Lunenburg Bay of Nova Scotia, Canada as part of an interdisciplinary research project of marine environmental prediction. The development of a high-resolution coastal circulation model is one of important components of the observatory. The model horizontal resolution is 60m and the vertical resolution is about 1m. The coastal circulation model is used to simulate the semi-diurnal tidal circulation and associated nonlinear dynamics with the M2 forcing specified at the model open boundaries. The model is also used to simulate the storm- induced circulation in the bay during Hurricane Juan in September 2003, with the model forcing to be the combination of tides and remotely generated waves specified at the model open boundaries and wind stress applied at the sea surface. The model results demonstrates strong strong interactions between the local wind stress, tidal forcing, and remotely generated waves during this period. Comparison of model re sults with the surface elevation and current observations demonstrates that the coastal circulation model has reasonable skills in simulating the tidal and storm-induced circulation in the bay.