Field measurements were used to investigate circulation, mixing processes, and variations in temperature and salinity in the coastal boundary layer off Perth, Western Australia. This region is characterized by a low amplitude diurnal tidal regime, a strong southwesterly summer sea breeze, and a topography dominated by submerged barrier reefs. Subinertial current dynamics were analyzed using a simplified depth-averaged alongshore momentum equation. Offshore of the reefs, the results showed a balance between wind stress, alongshore pressure gradient, and bottom friction and acceleration forces. The alongshore pressure gradient contributed to accelerating the water body, but wind was the dominant driving force for a majority of the time. Onshore of the reefs (lagoonal waters), the alongshore dynamic balance was mainly between wind stress and bottom friction. The temperature variability in Perth coastal waters was in agreement with the seasonal variations in the net air–sea heat flux. The exchange rates between lagoonal waters in the area and the adjacent shelf waters were estimated, and the results showed an estimated flushing time of 4 to 13 days for the lagoonal waters. The seasonal variations of salinity in the area were dominated by changes in the salinity of the offshore waters and local discharge of groundwater. The vertical structure of the nearshore water was found to be dominated by wind mixing. In summer, solar heating in the morning stratified the water column, the sea breeze mixed the water column in the afternoon, and convective cooling at night sustained this mixing until the early morning; in winter the water column generally remained mixed throughout the day.