In this study, a doubly nested tide–surge interaction model was established for the coastal region of Bangladesh. A fine grid model, capable of incorporating all major offshore islands, was nested into a coarse grid model extending up to 15°N latitude of the Bay of Bengal. To take into account the thickly populated small and big islands between Barisal and Chittagong and the extreme bending of the coastline accurately, a very fine grid model for this region was again nested into the fine grid model. Along the northeast corner of this very fine grid model, the Meghna River discharge was taken into account. The boundaries of the coast and islands were approximated through proper stair step, and the model equations were solved by semi–implicit finite difference technique using staggered grid. Appropriate tidal regime over the model domain was generated by forcing the sea level to be oscillatory with the constituent M2 along the southern open boundary of the coarse grid model omitting wind stress. This previously generated tidal regime was introduced as the initial state of the sea for nonlinear tide–surge interaction phenomenon. The model was applied to estimate water levels along the coastal region of Bangladesh due to the interaction of tide and surge associated with the storm April 1991, and the results were found to be in a reasonable agreement with those observed. The model was used to investigate the influence of offshore islands on water levels and water levels were found to be significantly influenced by offshore islands.