The annual variation in the structure and disposition of the principal water masses in the Gulf of Maine has been investigated with a set of water property observations using five shipboard surveys and four moored arrays with data telemetry. The time series observations document the cooling-induced destratification of the upper water column during autumn and the subsequent mixed-layer deepening in the western Gulf—primarily in Wilkinson Basin— during winter 1987. Unusually large amounts of fresher Scotian Shelf Water inflow inhibited winter 1987 vertical mixing in the eastern Gulf relative to the deep mixing in and around Wilkinson Basin in the western Gulf. The net result of these processes was a 1987 Gulf that was colder and fresher than the 1986 Gulf. Detailed histories of the thicknesses of the principal water masses in the Gulf—namely, Maine Surface Water, Maine Intermediate Water, and Maine Bottom Water—at the mooring sites reveal the early summer progression of Slope and Bottom Water from the Northeast Channel to Georges Basin and on to Jordan Basin. Maine Intermediate Water made up nearly 50% of the entire volume of the Gulf in early spring 1987. During the summer, Maine Intermediate Water in the eastern Gulf was replaced by a warmer water mass we call Summer Intermediate Water. A spring-summer 1987 sequence of CTD-derived water mass distribution maps documents (1) the retreat of Maine Intermediate Water into Wilkinson Basin, (2) the westward spread of Summer Intermediate Water, and (3) the inflow of Slope Water. A simple water mass conservation model indicates that 72% of the Maine Intermediate Water loss flows out of the observation domain at a rate of 0.21 × 106 m3/s, while the other 28% contributes, through mixing with Surface Water and Bottom Water in the eastern Gulf, to the production of Summer Intermediate Water. The combined inflow of Slope Water (0.11 × 106 m3/s), Bottom Water (0.03 × 106 m3/s), and Summer Intermediate Water (0.07 × 106 m3/s) appears to have balanced the April-July outflow of Maine Intermediate Water.