The objective of the present paper is to analyze the water and heat cycles of the Baltic Sea. The closure equations fur the water and heat cycles are formulated and the appropriate fluxes are calculated using the ocean model PROBE-Baltic forced by meteorological fields, river runoff and sea level data from the Kattegat. The time period considered is from November 1980 to November 1995. In the closing of the water cycle it is clear that river runoff, net precipitation (precipitation minus evaporation), in- and outflows through the Baltic Sea entrance area are the dominating flows. From the ocean model it is illustrated that the long-term water balance is consistent with the salinity in the Baltic Sea and that the net precipitation is positive during the studied period. For the closing of the heat cycle, the net heat loss to the atmosphere from the open water surface, as an annual moan, is in close balance with the solar radiation. The dominating fluxes in the net heat loss to the atmosphere are the sensible heat flux, the latent heat Aux and the net long wave radiation. The heat flux from water to ice also needs to be included in the modeling efforts. Heat flows associated with precipitation in the form of rain and snow can, as annual means, be neglected as well as the heat fluxes associated with river runoff, solar radiation through the ice and ice advecting out through the Baltic Sea entrance area. The total annual mean heat loss from the water body is in close balance with the annual change of heat storage in the water and the net heat exchange through the Baltic Sea entrance area is small. This illustrates that the Baltic Sea thermodynamically responds as a closed ocean basin.