Inherent uncertainties in estimation of extreme wave heights in hurricane-dominated regions are explored using data from the GOMOS Gulf of Mexico hindcast for 1900–2005. In particular, the effect of combining correlated values from a neighborhood of 72 grid locations on extreme wave height estimation is quantified. We show that, based on small data samples, extreme wave heights are underestimated and site averaging usually improves estimates. We present a bootstrapping approach to evaluate uncertainty in extreme wave height estimates. We also argue in favor of modeling supplementary indicators for extreme wave characteristics, such as a high percentile (95%) of the distribution of 100-year significant wave height, in addition to its most probable value, especially for environments where the distribution of 100-year significant wave height is strongly skewed.