In this paper we describe the fully nonlinear free-surface deformations of initially calm water caused by the water entry and water exit of a horizontal circular cylinder with both forced and free vertical motions. Two-dimensional flow conditions are assumed in the study. This has relevance for marine operations as well as for the ability to predict large amplitude motions of floating sea structures. A new numerical method called the CIP (Constrained Interpolation Profile) method is used to solve the problem. In this paper, the circular cylinder and free surface interaction is treated as a multiphase problem, which has liquid (water), gas (air), and solid (circular cylinder) phases. The flow is represented by one set of governing equations, which are solved numerically on a nonuniform, staggered Cartesian grid by a finite difference method. The free surface as well as the body boundary is immersed in the computational domain. The numerical results of the water entry and exit force, the free surface deformation and the vertical motion of the cylinder are compared with experimental results, and favorable agreement is obtained.