A suspended sediment transport model is implemented in the unstructured‐grid SUNTANS model and applied to study fine‐grained sediment transport in South San Francisco Bay. The model enables calculation of suspension of bottom sediment based on combined forcing of tidal currents and wind waves. We show that accurate results can be obtained by employing two‐size classes which are representative of microflocs and macroflocs in the Bay. A key finding of the paper is that the critical calibration parameter is the ratio of the erosion of the microflocs to macroflocs from the bed. Different values of this erosion ratio are needed on the shallow shoals and deeper channels because of the different nature of the sediment dynamics in these regions. Application of a spatially variable erosion ratio and critical shear stress for erosion is shown to accurately reproduce observed suspended sediment concentration at four‐field sites located along a cross‐channel transect. The results reveal a stark contrast between the behavior of the suspended sediment concentration on the shoals and in the deep channel. Waves are shown to resuspend sediments on the shoals, although tidal and wind‐generated currents are needed to mix the thin wave‐driven suspensions into the water column. The contribution to the suspended sediment concentration in the channel by transport from the shoals is similar in magnitude to that due to local resuspension. However, the local contribution is in phase with strong bottom currents which resuspend the sediments, while the contribution from the shoals peaks during low‐water slack tide.