The ocean plays a central role for the dynamics of the climate system. It can simultaneously act to damp certain components of the man-made climate changes, while amplifying others. At the same time, it is responsible for many aspects of climate variability which occur naturally (i.e. independent of man's activities). In the last decade there has been a considerable improvement in the skill with which the ocean can be modelled. There also have been advances in observing and monitoring certain aspects of the ocean circulation and thermal structure, although we are far short of a global ocean observing system. The physical basis for ocean modelling is outlined. While three-dimensional models based on the Navier-Stokes equations are now well developed, the parametrization of unresolved motions and the specification of appropriate boundary conditions still cause many difficulties. The wind-driven circulation is now reasonably well understood. Increasing computer power has permitted an explicit inclusion of mesoscale eddies which are particularly crucial for the dynamics of western boundary currents such as the Gulf Stream. An area of considerable recent progress is the interaction of the tropical oceans with the atmosphere which leads to short-term climate fluctuations known as ENSO (El Nino-Southern Oscillation). On time scales of several months some rudimentary forecasts have been achieved although it is not yet clear how precisely the climate fluctuations associated with ENSO may be predicted. Considerable uncertainties remain about climate variations on decadal and longer time scales. Due to differences in the way heat and fresh water are exchanged with the atmosphere, the thermohaline circulation can have more than one stable equilibrium state. Small changes in surface salinity can disrupt the thermohaline circulation and cause transitions to different climatic states within a few decades (so-called halocline catastrophe).
