AbstractA heterogeneous domain decomposition approach is followed to simulate the unsteady wavy flow generated by a body moving beneath a free surface. Attention being focused on complex free surface configurations, including wave‐breaking phenomena, a two‐fluid viscous flow model is used in the free surface region to capture the air–water interface (via a level‐set technique), while a potential flow approximation is adopted to describe the flow far from the interface. Two coupling strategies are investigated, differing in the transmission conditions. Both the adopted approaches make use of the inviscid velocity field as boundary condition in the Navier–Stokes solution.For validation purposes, two different two‐dimensional non‐breaking flows are simulated. Domain decomposition results are compared with both fully viscous and fully inviscid results, obtained by solving the corresponding equations in the whole fluid domain, and with available experimental data. Finally, the unsteady evolution of a steep breaking wave is followed and some of the physical phenomena, experimentally observed, are reproduced. Copyright © 2003 John Wiley & Sons, Ltd.