Third-generation wave models have been evolved in 1980s with the state-of-the-art physics of wave generation. Using these models, the real time wave estimation is made possible but, in general, it is found to be underpredicted. This is mainly due to the smoothened wind vectors from the atmospheric model. An accurate prediction of wind is thus necessary to improve the wave prediction further. A better way of overcoming the discrepancies in the wind is by the way of wave data assimilation. In the present study, an operationally efficient yet a versatile assimilation model, optimal interpolation (OI), has been presented. The weighting matrix, so-called gain matrix, has been formulated according to the model physics by which the wind generates waves. The efficiency of the assimilative model using real time buoy observations at the Arabian Sea has been evaluated and described in this article. The root mean square error reduction of wave height is found to be of the order of 30-50% at the validation stations. © Springer Science+Business Media B.V. 2008.