The widespread fish kills of Gulf menhaden (Brevoortia patronus) were reported beginning on 7/31/2015 in Cotton Bayou, Orange Beach City, Alabama, USA. In response to the degrading water quality in the Cotton Bayou area, a quantitative analysis was done to simulate salinity, water temperature, and dissolved oxygen by developing a three-dimensional hydrodynamic and water quality model using EFDC+ (Environmental Fluid Dynamics Code) for the Perdido and Wolf Bay system including the Cotton Bayou. The model has 5303 curvilinear horizontal grids and four horizontal layers in the vertical direction. The external driving forces include the nine freshwater inflows into the study area, atmospheric weather parameters, and the astronomical tides contributing/affecting hydrodynamic and surface heat exchange. Three continuous data-collecting probes were installed in the Cotton Bayou-Terry Cove system to collect water level, water temperature, salinity, and DO data every two hours from November 2022 to July 2023. The model was calibrated and validated using statistical parameters to assess the accuracy against observed data. Simulation results in Cotton Bayou were analyzed to diagnose the low DO occurrences in late Summer. Through the sensitivity analysis, it was found that the chemical oxygen demand, sediment oxygen demand, and wind speed could have a large effect on the vertical distribution of the dissolved oxygen for shallow water regions. The model was also further used to examine how the system responds to future climate change (sea level rise and air temperature increase under the global warming projection).