Three‐dimensional circulation in the coastal transition zone (CTZ) off Oregon is studied using a 3 km resolution model based on the Regional Ocean Modeling System. The study period is spring and summer 2002, when extensive observations were available from the northeastern Pacific component of the Global Ocean Ecosystems Dynamics project. Our main focus is on near‐surface transports, particularly in an area off Cape Blanco where an energetic coastal current is separated in the CTZ. Comparisons with available observations (velocities from midshelf moorings, surface velocities from high‐frequency radars, satellite sea surface temperature maps, along‐track sea surface height altimetry, and SeaSoar hydrography) show that the model reproduces qualitatively correctly the flow structure and variability in the study area. The near‐surface flow behavior during 26 July to 21 August, a late‐summer time period of strong, time‐variable southward winds, is examined. During that period the coastal jet separates from the continental shelf around Cape Blanco (43°N). The energetic separated jet continues to flow southward in a near‐coastal region between 42.2°N and 43°N. It subsequently turns around 42°N to flow westward offshore past 127°W. Relatively vigorous up‐ and downwelling is found concentrated in the region of the separated jet. Frontogenesis secondary circulation, nonlinear effects of the relative vorticity on the ageostrophic Ekman transport, and submesoscale instabilities contribute to the vertical circulation within the jet. Vertical velocities are found to reach 50 m d−1 in the offshore part of the jet and 100 m d−1 in the near‐coastal part, where the jet is aligned with the wind direction.