A high-resolution, regional coupled atmosphere–ocean model is used to investigate strong air–sea interactions during a rapidly developing extratropical cyclone (ETC) off the east coast of the USA. In this two-way coupled system, surface momentum and heat fluxes derived from the Weather Research and Forecasting model and sea surface temperature (SST) from the Regional Ocean Modeling System are exchanged via the Model Coupling Toolkit. Comparisons are made between the modeled and observed wind velocity, sea level pressure, 10 m air temperature, and sea surface temperature time series, as well as a comparison between the model and one glider transect. Vertical profiles of modeled air temperature and winds in the marine atmospheric boundary layer and temperature variations in the upper ocean during a 3-day storm period are examined at various cross-shelf transects along the eastern seaboard. It is found that the air–sea interactions near the Gulf Stream are important for generating and sustaining the ETC. In particular, locally enhanced winds over a warm sea (relative to the land temperature) induce large surface heat fluxes which cool the upper ocean by up to 2 °C, mainly during the cold air outbreak period after the storm passage. Detailed heat budget analyses show the ocean-to-atmosphere heat flux dominates the upper ocean heat content variations. Results clearly show that dynamic air–sea interactions affecting momentum and buoyancy flux exchanges in ETCs need to be resolved accurately in a coupled atmosphere–ocean modeling framework.