A primitive equation Gulf of Mexico model was used to examine variability of the Loop Current (LC) and Loop Current eddies (LCE). Realistic results were obtained for a certain range of values of the horizontal mixing coefficient: eddy paths were west and southwestward; eddy propagation speeds from 3 to 5 km day−1; the ratio of minor to major eddy axes about 0.8; eddy shedding periods from 200 to 500 days; eddy lifetimes from 100 to 200 days; eddy sizes from 200 to 400 km; and eddy swirl transports, as fractions of the specified inflow of 30 Sv, were from 0.55 to 0.85. On the other hand, the maximum vertical deepening of the 20°C isotherm was 15% to 50% less than that observed, resulting in weaker near-surface currents of about 0.65 m s−1, in comparison to observed values of 0.88 to 1.7 m s−1. A strong correlation between eddy shedding and decreasing or reversing lower-layer (below 750 m) transport in the Yucatan Channel is found. In the western Gulf, current variability is produced by eddy arrivals, as well as by forcing due to bottom-intensified topographic Rossby waves, which propagate along the slope from the east with a group velocity of about 12 km day−1 and periods of about 30–100 days. These waves are generally preceded by faster coastally trapped wave propagation, and all are produced by LC pulsation, eddy shedding, and westward propagation.