There are many islands and reefs out of the Hangzhou Bay, and the wave propagation mechanism is complex. In order to understand characteristics of wave distribution of the sea area, MIKE 21 SW module was used to establish a numerical model of wave for the Hangzhou Bay, and the model was validated with the observed wave data. The extreme wave data of Shengshan Marine Observation Station between 1970—2002 was used to calculate wave elements with a return period of 50 years, as the boundary conditions of the model. And then, the designed wave with a return period of 50 years in the Hangzhou Bay was simulated, while the characteristics of wave propagation was also analysed. The results show that the model is suitable to simulate the wave propagation in the Hangzhou Bay. Comparing with the wave height of the open sea, the wave height in the Hangzhou Bay is significantly smaller, and it is assumed that many islands and reefs outside of the Hangzhou Bay may play very good protection functions.