Abstract. The three-dimensional flow, temperature and salinity fields of the North Atlantic, including the Arctic Ocean, covering the time period 1992 to 2006 are simulated with the numerical ocean model CODE. The simulation reveals several new insights and previously unknown structures which help us to clarify open questions on the regional oceanography of Icelandic waters. These relate to the structure and geographical distribution of the coastal current, the primary forcing of the North Icelandic Irminger Current (NIIC) and the path of the Atlantic Water south-east of Iceland. The model's adaptively refined computational mesh has a maximum resolution of 1 km horizontal and 2.5 m vertical in Icelandic waters. CTD profiles from this region and the river discharge of 46 Icelandic watersheds, computed by the hydrological model WaSiM, are assimilated into the simulation. The model realistically reproduces the established elements of the circulation around Iceland. However, analysis of the simulated mean flow field also provides further insights. It suggests a distinct freshwater-induced coastal current that only exists along the south-west and west coasts, which is accompanied by a counter-directed undercurrent. The simulated transport of Atlantic Water over the Icelandic shelf takes place in a symmetrical system of two currents, with the established NIIC over the north-western and northern shelf, and a hitherto unnamed current over the southern and southeastern shelf, which is simulated to be an upstream precursor of the Faroe Current (FC). Both currents are driven by barotropic pressure gradients induced by a sea level slope across the Greenland-Scotland Ridge. The recently discovered North Icelandic Jet (NIJ) also features in the model predictions and is found to be forced by the baroclinic pressure field of the Arctic Front, to originate east of the Kolbeinsey Ridge and to have a volume transport of around 1.5 Sv within northern Denmark Strait. The simulated multi-annual mean Atlantic Water transport of the NIIC increased by 85 % during 1992 to 2006, whereas the corresponding NIJ transport decreased by 27 %. Based on our model results we propose a new and further differentiated circulation scheme of Icelandic waters whose details may inspire future observational oceanography studies.