A two-way interactive, nested-grid system tested with The Pennsylvania Slate University/INCAR three-dimensional mesoscale model is described. A mesh structure, designed to minimize numerical noise, together with a procedure for obtaining compatible coarse grid mesh (COM) and fine grid mesh (FOM) terrain conditions, is presented. Also, a method to initialize the nested-grid meshes is proposed. The nested-grid system has been tested with real data and raw terrain under different severe conditions. A 12-h simulation of a propagating jet streak over complex terrain is presented; the results indicate relatively noise-free solutions on both the OGM and FGM domains.