Description: In this paper, different types of new data sets (hydrography, Lagrangian and Eulerian current measurements) and Quasi-Geostrophic model results, obtained after altimetric data assimilation, are used to study the structure and variability of the Azores Current and Frontal system. The Azores Current was observed to transport between 11.0 and 18.0 Sv eastwards and the associated Counter Current some 2.0–10.0 Sv to the west, resulting in a net value of about 8–9 Sv. Furthermore, both data and model results revealed a meandering Azores Current, where some freely rotating eddies were also identified. These hydrographic and Lagrangian results exhibit space and time scales that agree fairly well with the dynamics shaped by baroclinic instability. Current meters moored across the Azores Current system delineated a mean Counter Current flowing westwards with a maximum subsurface core of about 2.0 cm/s at a mean depth of 800 dbar. This is in excellent agreement with previous studies, which explains this Azores Counter Current as the rectification process of the geostrophic turbulence occurring north of the main Azores Current stream. A new scheme is proposed for the formation mechanism of the freely rotating cyclonic eddies observed south of the Azores. It is shown that the north–south contrast thickness of the 17–19°C water layer across the Azores Front decreases downstream. This will create, in turn, a downstream increase of the most unstable wavelength, in a non-linear baroclinic instability context. As a consequence, both large cyclonic and anticyclonic features are able to form at the eastern side of the Azores Current (around 19°W), while at the western side (around 35°W) only large anticyclones will survive (western-generated cyclones will be small enough to be quickly dissipated). This means that the eastern cyclones of the Azores Current may live longer than the shorter western ones. However, because longer-lived cyclonic eddies propagate westwards with a mean speed of 2.5 km/day, they may be observed south of Azores and of the main stream several months later, although they were not formed there.