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Located at the Pearl River Estuary, the hydro-environment of Hong Kong is highly complex, affected by tidal and oceanic current with seasonal variation in freshwater discharge. A robust modelling tool is essential for the realistic simulation of the hydrodynamics and water quality of the Hong Kong, for the environmental impact assessment of development projects, and decision support in environmental management. Since the 1980’s, the Environmental Protection Department has been adopting the state-of-the-art modelling technologies as the scientific tool for water quality management. Collaborating with the world-leading hydro-environment research institute Deltares of the Netherlands, EPD has developed a new regional hydrodynamic and water quality model for Hong Kong, using the advanced Delft Three D Flexible Mesh technology. The DFM Hong Kong model has its boundary extended from Hainan Island to Taiwan Strait. The model grid has a high resolution with a minimum grid size of about seventy meters in Hong Kong waters. DFM utilizes the unstructured grid technology, which allows the use of a combination of rectangular, curvilinear and triangular grid cells. The unstructured grid provides more flexibility in model grid modification and refinement, better fitting the complex local coastline with many islands and channels. The model is shown to better simulating the coastal hydrodynamics and marine water quality of Hong Kong. The DFM software has Geographical Information System-based user interface, with essential model components defined in geographical coordinates, much enhancing the efficiency of modelling works. It also allows parallel computation and simultaneous coupled hydrodynamic and water quality modelling. These features are expected to enhance the quality and efficiency of water quality modelling in environmental impact assessment studies.