Tidal current-induced cyclonic eddies cause cold-water upwelling and periodic sea surface temperature (SST) drops around the coral reef area in Nanwan Bay, which is located at the southern tip of Taiwan. This study used Himawari-8 satellite data and tide gauge and coastal ocean dynamics application radar (CODAR) data to analyze the characteristics of the SST drops and cyclonic eddy propagation and used an oceanic general circulation model (OGCM) to simulate the tidal current flowing process. According to the CODAR data analysis, the mixed primary semidiurnal tide had an average current velocity of 0.3–0.4 m s−1 throughout the bay, and the average life cycle of a cyclonic eddy is 6.6 hr, with a propagation speed of 0.35 m s−1. The SST drop during the spring tide period was greater than that during the neap tide period, and the SST dropped in both summer and winter. The average daily SST drop in the summer reached 2 °C with a maximum observed value of 4.7 °C, and the SST drop rate was 0.3–0.5 °C hr−1. The annual mean chlorophyll-a concentration was 0.25 mg m−3. This study explored the special properties of the Nanwan Bay coral reef area from the perspective of ocean physics to allow ecologists to facilitate the implementation of long-term conservation and monitoring programs.