A three-dimensional hydrodynamic-ecosystem model was developed and applied to Chinhae Bay which is located in the southeastern sea of Korea. The model includes a three-dimensional hydrodynamic model and an eutrophication model, and the model operates on the same grid system. The agreement between predicted and measured results is reasonably encouraging. The concentrations of the calculated COD, DIN and DIP are appeared to be very high due to the phytoplankton production and the wastewater input in the northern part of Chinhae Bay. Anoxic and hypoxic water masses in the bottom layer occur in the northern part of the bay due to the excess loading of wastewater and strong stratification, and in the western inner part of the bay due to high oxygen consumption in densely populated aquaculturing facilities. DO concentration contours show parallel to the bay entrance line, which means the importance of supplying DO by physical process from the mouth of the bay. Although both the hydrodynamic and biochemical processes play important role to form the hypoxic waters in the bottom of the inner bay, it is suggested that the hydrodynamic conditions such as the vertical and the horizontal eddy diffusivity are primarily important factors.