A 3-D coastal ocean model with a tidal turbine module was used in this paper to study the effects of tidal energy extraction on temperature and salinity stratification and density-driven two-layer estuarine circulation. Numerical experiments with various turbine array configurations were carried out to investigate the changes in tidally averaged temperature, salinity, and velocity profiles in an idealized stratified estuary that connects to coastal water through a narrow tidal channel. The model was driven by tides, river inflow, and sea surface heat flux. To represent the realistic size of commercial tidal farms, model simulations were conducted based on a small percentage (less than 10 %) of the total number of turbines that would generate the maximum extractable energy in the system. Model results show that extraction of tidal in-stream energy will increase the vertical mixing and decrease the stratification in the estuary. Installation of in-stream tidal farm will cause a phase lag in tidal wave, which leads to large differences in tidal currents between baseline and tidal farm conditions. Extraction of tidal energy in an estuarine system has stronger impact on the tidally averaged salinity, temperature, and velocity in the surface layer than the bottom layer even though the turbine hub height is close to the bottom. Finally, model results also indicate that extraction of tidal energy weakens the two-layer estuarine circulation, especially during neap tides when tidal mixing is weakest and energy extraction is smallest.