For a given atmospheric large scale environment, the intensity of a hurricane is controlled by air-sea interaction, which is dominated by processes associated with the enthalpy flux across the air-sea interface and entrainment of cold water across the thermocline at the bottom of the oceanic mixed layer (OML). In this study, a limited-area air-sea coupled modeling system is used to carry out numerical experiments to evaluate the impact of air-sea interaction on hurricane intensification. This coupled modeling system was developed at NOAA/ETL by the authors, and is made of three well tested model components: the Penn State/NCAR Mesosale Model (MM5), the Princeton Ocean Model (POM) and the WAMDI wave model (WAM). We will present results of sensitivity experiments illustrating the role that the loop-current warm eddy in the Gulf of Mexico plays in air- sea interaction when a hurricane moves over the warm eddy. The sensitivity of the development of the simulated hurricane to the mixing in OML, sea spray and sea-surface waves will also be discussed