This article presents the modelling and simulation of the dynamic coupling in an autonomous underwater vehicle (AUV)-manipulator system, used for subsea intervention tasks. Bond graph, a powerful tool in multi-domain dynamic system modelling, is used for the first time to model the coupled dynamics of the AUV-manipulator system. This method enables the development of the system model in a modular form by creating sub-system models and connecting these models together at energy interactions ports, thus overcoming many of the computational difficulties encountered in conventional modelling methods. The effects of gravity, buoyancy, added mass and fluid drag on the dynamics of a 3 degrees of freedom (DoF) manipulator mounted on a 6 DoF AUV are analysed. The manipulator trajectory errors due to the interaction forces and moments between the vehicle and the manipulator have also been investigated and the results are presented. The dynamic model predicts the reaction forces on the vehicle under various operating conditions of the manipulator and their influence on the manipulator trajectory. The percentage errors of manipulator tip trajectory for different initial configurations and operating conditions are analysed. The estimation of resulting errors in the manipulator path due to dynamic coupling effect on the manipulator trajectory helps in the design of suitable trajectory controller for the system. Cartesian space transpose Jacobian controller for trajectory control of manipulator has been implemented and results are presented. © 2012 Taylor and Francis Group, LLC.