A three dimensional structure of mesoscale circulation in the Black Sea is simulated using the Proudman Oceanographic Laboratory Coastal Ocean Modelling System. A number of sensitivity tests reveal the response of the model to changes in the horizontal resolution, time steps, and diffusion coefficients. Three numerical grids are examined with x-fine (3.2 km), fine (6.7 km) and coarse (25 km) resolution. It is found that the coarse grid significantly overestimates the energy of the currents and is not adequate even for the study of basin-scale circulation. The x-fine grid, on the other hand, does not give significant advantages compared to the fine grid, and the latter is used for the bulk of simulations. The most adequate parameters are chosen from the sensitivity study and used to model both the basin-scale circulation and day-to-day variability of mesoscale currents for the months of May and June of 2000. The model is forced with actual wind data every 6 h and monthly climatic data for evaporation, precipitation, heat fluxes and river run-off. The results of the fine grid model are compared favourably against the satellite imagery. The model adequately reproduces the general circulation and many mesoscale features including cyclonic and anticyclonic eddies, jets and filaments in different parts of the Black Sea. The model gives a realistic geographical distribution and parameters of mesoscale currents, such as size, shape and evolution of the eddies. [ABSTRACT FROM AUTHOR]