This paper proposes an explanation of the mud deposits on the inner Shelf of Cassino Beach, South Brazil, by using computational modeling. These mud deposits are mainly formed by sediments delivered from Patos Lagoon, a coastal lagoon connected to the Shelf, next to Cassino Beach. The deposits are characterized by (soft) mud layers of about 1 m thick and are found between the −5 and −20 isobaths. Two hydrodynamic models of the larger Patos Lagoon–Cassino Beach system were calibrated against water elevation measured for a 5 months period, and against currents and salinity measured for a week period. The circulation patterns and water exchange through the mouth were analyzed as a function of local and remote wind effects, and river discharges. The remote wind effect mainly governs the quantity of water exchange with the Lagoon through its effect on mean sea level as a result of Ekman dynamics, while river discharges are important for the salinity of the exchanged water masses. Local winds augment the export–import rates by set-up and set-down within the Lagoon, but their effects are much smaller than those of the remote wind. Currents patterns on the inner Shelf during water outflow revealed a recirculation zone south of the Lagoon, induced by the local geometry and bathymetry of the system. This recirculation zone coincides with observed locations of mud deposition. Water, hence suspended sediment export occurs when remote and local winds are from the N–E, which explains why fine sediment deposits are mainly found south of the Lagoon's breakwater. A sensitivity analysis with the numerical model quantified the contribution of the various mechanisms driving the transport and fate of the fine suspended sediments, i.e. the effects of remote and local wind, of the astronomical tide, of river discharge and fresh–salt water-induced density currents, and of earth rotation. It is concluded that gravitational circulation and earth rotation affects the further dispersion of the deposits largely, whereas the remote wind effect has the largest influence on the amount of sediment released from the Lagoon. It is noted that this paper analyzes the initial deposition patterns induced by current effects only. However, in reality, these deposits are further redistributed over the Shelf by wave effects—these are subject of a next study on the sediment dynamics of the larger Patos Lagoon–Cassino Beach system.