A two-dimensional (2D), laterally averaged, hydrodynamic and water quality model, CE-QUAL-W2, was used to simulate the hydrodynamics and water temperatures of Xiangxi Bay (XXB) of the Three Gorges Reservoir (TGR). Algal blooms occurred seasonally in XXB which is influenced by density currents. The CE-QUAL-W2 model was calibrated using data collected in XXB from January to December 2010. The model was then used to examine the environmental factors that affect the density currents. The model predicted density currents such as overflows, interflows and underflows of the XXB. The results suggest that more than 25%, 58.33% and 16.67% of the density currents that occurred in the XXB were overflow, interflow and underflow, respectively. Field observations were conducted including travel distance and thickness of intrusion layer for 24 days in 2010. The average travel distance of overflow, interflow and underflow in XXB was 15.50 km, 8.78 km, and 9 km based on observations and 16 km, 9.40 km, 9.60 km based on the model results. Therefore, numerical simulations of density currents can be predicted to better understand the hydrodynamics and aquatic ecosystems in XXB of TGR.