In this work, a three dimensional numerical model has been developed to simulate the density induced currents in coastal water bodies. In the model, sigma coordinate transformation and finite difference approximations on a staggered grid have been applied. Water depths are divided into the same number of layers following the bottom topography. In this baroclinic numerical model, three dimensional water salinity and temperature distributions and in turn water density distributions and density induced circulations have been simulated over complex bathymetries. Developed model has been applied to Fethiye Bay located in the Mediterranean coastline of Turkey, in which there exists site measurements.