Seasonal subsurface temperature monitoring, which exploits the fact that increased seepage flow may locally alter the temperature distribution, is a useful approach for leakage monitoring and evaluation within embankment dams and their foundations. At the Mactaquac Generating Station, New Brunswick, Canada, spatial and temporal variations of temperature have been monitored and modelled at the steeply inclined interface between the compacted clay till core of the embankment dam and an abutting concrete diversion sluiceway. Over a 4-year period, two seasonally recurring anomalies at different depths were observed by fibre optic distributed temperature sensing in the concrete structure close to the interface. A 3D coupled flow and heat transport model was developed in FEFLOW to simulate temperature distribution within the dam resulting from seasonal variations in air and reservoir temperature. Leakage zones near the interface were simulated in the concrete and embankment. At a depth of 13 m below the crest, the significant lag time between temperature variations in the reservoir and dam core shows that the leakage responsible for an observed temperature anomaly must be limited to enhanced flow within the concrete. At much shallower depths, where seasonal reservoir and dam core temperatures fluctuate nearly in phase, seepage paths are more challenging to determine.