A coupled atmosphere-ocean model has been developed to monitor and analyze the marine environment of Ise Bay, Japan, which is a semi-enclosed sea with an area of 2,342km² and a mean depth of 17m. The coupled model consists of three models: the Penn State University / National Center for Atmospheric Research mesoscale model MM5, the Princeton ocean model POM and National Astronomical Observatory (Japan) tide prediction model NAOTIDEJ. The coupled model was run at 1km horizontal grid spacing with 20 vertical levels for MM5 and 15 for POM, and validated using datasets from meteorological and tidal observation stations around the bay, a marine observation tower, a buoy-fixed ADCP and CTD casts. Comparing simulated winds to observations showed that the RMS errors are 2.0 to 2.5m/s and the correlation coefficients are 0.6 to 0.8. For tidal elevation, the maximum RMS error is 17cm and the minimum correlation coefficient is 0.96. The accuracy of simulated currents tends to be worse toward upper levels. At low and middle levels, the correlation coefficients are about 0.7 and the RMS errors are less than 10cm/s, while at upper levels they are about 0.5 and 15cm/s, respectively. This large error is found to be due to the inaccuracy of simulated stratification at upper levels, which is intricately-intertwined with most dynamic and thermodynamic processes of air-sea interaction.