The Arabian Sea and Sea of Oman circulation and water masses, subject to monsoon forcing, reveal a strong seasonal variability and intense mesoscale features. We describe and analyze this variability and these features, using both meteorological data (from ECMWF reanalyses), in situ observations (from the ARGO float program and the GDEM - Generalized Digital Environmental mode - climatology), satellite altimetry (from AVISO) and a regional simulation with a primitive equation model (HYCOM - the Hybrid Coordinate Ocean Model). The model and observations display comparable variability, and the model is then used to analyze the three-dimensional structure of eddies and water masses with higher temporal and spatial resolutions than the available observations. The mesoscale features are highly seasonal, with the formation of coastal currents, destabilizing into eddies, or the radiation of Rossby waves from the Indian coast. The mesoscale eddies have a deep dynamical influence and strongly drive the water masses at depth. In particular, in the Sea of Oman, the Persian Gulf Water presents several offshore ejection sites and a complex recirculation, depending on the mesoscale eddies. The associated mechanisms range from coastal ejection via dipoles, alongshore pulses due to a cyclonic eddy, to the formation of lee eddies downstream of Ra's Al Hamra. This water mass is also captured inside the eddies via several mechanisms, keeping high thermohaline characteristics in the Arabian Sea. The variations of the outflow characteristics near the Strait of Hormuz are compared with variations downstream.