This paper examines the relationship between offshore wave climate and nearshore waves and currents at Hanalei Bay, Hawaii, an exposed bay fringed with coral reefs. Analysis of both offshore in situ data and numerical hindcasts identify the predominance of two wave conditions: a mode associated with local trade winds and an episodic pattern associated with distant source long-period swells. Analysis of 10 months of in situ data within the bay show that current velocities are up to an order of magnitude greater during long-period swell episodes than during trade wind conditions; overall circulation patterns are also fundamentally different. The current velocities are highly correlated with incident wave heights during the swell episodes, while they are not during the modal trade wind conditions. A phase-averaged wave model was implemented with the dual purpose of evaluating application to bathymetrically complex fringing reefs and to examine the propagation of waves into the nearshore in an effort to better explain the large difference in observed circulation during the two offshore wave conditions. The prediction quality of this model was poorer for the episodic condition than for the lower-energy mode, however, it illustrated how longer-period swells are preferentially refracted into the bay and make available far more nearshore wave energy to drive currents compared to waves during modal conditions. The highly episodic circulation, the nature of which is dependent on complex refraction patterns of episodic, long-period swell has implications for flushing and sediment dynamics for incised fringing reef-lined bays that characterize many high islands at low latitudes around the world.