AbstractCoupled circulation (NEMO) and wave model (WAM) system was used to study the effects of surface ocean waves on water temperature distribution and heat exchange at regional scale (the Baltic Sea). Four scenarios—including Stokes-Coriolis force, sea-state dependent energy flux (additional turbulent kinetic energy due to breaking waves), sea-state dependent momentum flux and the combination these forcings—were simulated to test the impact of different terms on simulated temperature distribution. The scenario simulations were compared to a control simulation, which included a constant wave-breaking coefficient, but otherwise was without any wave effects. The results indicate a pronounced effect of waves on surface temperature, on the distribution of vertical temperature and on upwelling’s. Overall, when all three wave effects were accounted for, did the estimates of temperature improve compared to control simulation. During the summer, the wave-induced water temperature changes were up to 1 °C. In northern parts of the Baltic Sea, a warming of the surface layer occurs in the wave included simulations in summer months. This in turn reduces the cold bias between simulated and measured data, e.g. the control simulation was too cold compared to measurements. The warming is related to sea-state dependent energy flux. This implies that a spatio-temporally varying wave-breaking coefficient is necessary, because it depends on actual sea state. Wave-induced cooling is mostly observed in near-coastal areas and is the result of intensified upwelling in the scenario, when Stokes-Coriolis forcing is accounted for. Accounting for sea-state dependent momentum flux results in modified heat exchange at the water-air boundary which consequently leads to warming of surface water compared to control simulation.