Urmia Lake, located in a closed basin in north-west Iran, is the largest lake (5000–6000 km²) in the Middle East. It is very saline with total dissolved salts reaching 200 g/l compared with a normal seawater salinity of about 35 g/l. The construction of a causeway, which was initiated in 1979 but then abandoned until the early 2000s, is near completion and will provide road access between the western and eastern provinces. The causeway has an opening 1.25 km long and divides Urmia Lake into a northern and southern basin and restricts water exchange. The flow and salinity regimes are affected by the presence of this new causeway, and there are concerns over the well being of the Artemia population. This study investigates the effects of the construction of the causeway on flow and salinity regimes, considers remedial actions, and examines the effects of climatic variability on salinity and flow. Flow and salinity regimes were numerically simulated by using a commercially available two and three-dimensional (2D and 3D) MIKE model. The validity of the numerical model was assessed through sensitivity analysis of the model and comparing the simulated results against field measurements; the 3D model provided the higher correlation between simulated and actual data. Wind input was the main climatic and hydrologic factor influencing flow regime while river discharge, evaporation and rainfall were the key parameters affecting salinity distribution in the lake models. The 3D model was subsequently used to predict lake conditions in typical dry, wet and normal climates, to examine the environmental impacts from the new causeway, and to evaluate possible improvements that some remedial measures may provide.