A two-dimensional mesoscale model has been developed to simulate the air flow over the Gulf Stream area where typically large gradients in surface temperature exist in the winter. Numerical simulations show that the magnitude and the maximum height of the mesoscale circulation that develops downwind of the Gulf Stream depends on both the initial geostrophic wind and the large-scale moisture. As expected, a highly convective Planetary Boundary Layer (PBL) develops over this area and it was found that the Gulf Stream plays an important role in generating the strong upward heat fluxes causing a farther seaward penetration as cold air advection takes place. Numerical results agree well with the observed surface fluxes of momentum and heat and the mesoscale variation of vertical velocities obtained using Doppler Radars for a typical cold air outbreak. Precipitation pattern predicted by the numerical model is also in agreement with the observations during the Genesis of Atlantic Lows Experiment (GALE).