Strong currents and large surface gravity waves always jointly exist under tropical cyclone conditions. The momentum flux at the air-sea interface strongly depends on the wave field and can be significantly modified by the ocean currents. The effects of wind-wave-current interaction on the wave predictions using the NOAA's WAVEWATCH III model are investigated. The model results are compared with field observations of the surface wave spectra from a scanning radar altimeter, NDBC time series and satellite altimeter measurements in Hurricane Ivan (2004). The results suggest that the model with the original drag coefficient parameterization tends to overestimate the significant wave height and the dominant wave length, and produces a wave spectrum that is higher in wave energy and narrower in directional spreading. When an improved drag parameterization is introduced and the wave-current interaction is included, the model yields improved forecast of significant wave height and wave spectral energy, but underestimates the dominant wave length. When the hurricane moves over pre-existing mesoscale ocean features (warm- and cold-core rings, the Loop Current), the short-term current response can be significantly modulated by the non-linear interaction of the storm-induced and pre-existing currents in the mixed layer. This modulation may also affect surface gravity wave prediction.