The initial filling of the Three Gorges Reservoir (TGR), China, has caused serious phytoplankton blooms in its tributary bays. A two-dimensional, laterally averaged, hydrodynamic and water quality CE-QUAL-W2 model was used to simulate the hydrodynamics and water temperature of a typical tributary (Xiangxi Bay XXB) of the TGR to study the relationship between phytoplankton and density currents. The CE-QUAL-W2 model was calibrated to data collected in XXB (depth profiles of velocity and water temperature at three locations) from January 2008 through December 2008. The model performed well in simulating (1) flow velocity profiles, (2) unusual water temperature profiles, (3) the plunge point location of the intrusion layer, (4) propagation speed, and (5) the travel distance of the density currents. The model was then used to examine potential factors that affect the density currents, such as water level fluctuations in the mainstem of the TGR, water temperature differences between the mainstem and XXB, and inflow rates to XXB. Therefore, a better understanding of the hydrodynamics of tributaries in the TGR can be used to understand the aquatic ecosystem dynamics of these tributaries.