Environmental Fluid Dynamics Code (EFDC) is a three-dimensional sigma coordinate hydrodynamic model coupled with a water quality model. The EFDC model has been used worldwide in environmental modeling of surface water hydrodynamics and transport. The EFDC model employs a vertical sigma-coordinate transformation to deal with irregular water depth. This coordinate transformation introduces additional terms in horizontal pressure gradients. It is well known that direct numerical discretization of the full sigma-transformation of the horizontal pressure gradient produces numerical errors when a steep bottom slope exists. Errors in pressure gradient calculations can cause errors in velocity field and ultimately can result in spurious transports. In this study, an effective numerical algorithm is presented to reduce numerical errors induced by the horizontal pressure gradient term in the sigma coordinate. The transformed pressure terms in the sigma coordinate are discretized in sigma grids into the similar finite difference form along z-levels as those in the z-coordinate. The corresponding values of buoyancy and density for pressure calculations are determined by the fourth order Lagrangian interpolation in the vertical direction in the sigma grids. The enhanced EFDC model code has been satisfactorily tested in three cases: (1) flat bottom basin, (2) coastal shelf, and (3) navigation channel. Results indicate that the conventional approach, dealing with horizontal pressure gradient terms in the original EFDC model, causes spurious surface elevation and errors in the velocity field. In comparison, use of a new algorithm in the enhanced EFDC model presented in this study significantly reduces numerical errors in predicting surface elevation and currents.