The Gulf of Kachchh (Gulf), India, an ecologically rich habitat, has a wide variety of activities, such as extensive salt farming along the coast, brine release from salt farms, maintenance dredging by ports and disposal of dredged material, release of hot water from thermal power plants, and navigation. Management of coastal and marine areas by maintaining the balance between the developmental activities and protection of marine environment is a challenging task for coastal managers and requires a complete understanding of the physical, chemical, and biological aspects of the system. In this study, a two-dimensional hydrodynamic model (MIKE-21) was developed for Gulf of Kachchh with rectangular grid resolution of 450 by 450 m to understand the role of circulation pattern for mixing capacity of the Gulf. The model was calibrated with tide and current at predetermined locations. The model predictions show good agreement with the measured tide and current data. The model-predicted amplitudes and phases of major tidal constituents at four locations compare well with the observed data. The root mean square error for model predictions was found to be within 10%. Analysis of residual currents obtained from a 29.5-days simulation revealed the formation of eddies in the outer Gulf. Presence of these eddies and the magnitudes of residual currents indicate the mixing capacity of the central and outer Gulf. The results strengthen and extend understanding of circulation and mixing patterns in the management of the habitat.