A new operational ocean analysis/reanalysis system (ORA-S3) has been im- plemented at ECMWF. The reanalysis started from 01/01/1959: it is continuosly maintained up to 11 days behind real time and is used to initialize seasonal fore- casts as well as to provide a historical representation of the ocean for climate studies. It has several innovative features, including an on-line bias-correction algorithm, the assimilation of salinity data on temperature surfaces and assimi- lation of altimeter-derived sea level anomalies and global sea level trends. It is designed to reduce spurious climate variability in the resulting ocean reanaly- sis due to the non-stationary nature of the observing system, while still taking advantage of the observation information. In addition to the basic analysis, a real-time analysis is produced (RT-S3). This is needed for monthly forecasts and in future may be needed for shorter- range forecasts. It is initialised from the near-real-time ORA-S3 and run each day from it. The new analysis system is compared with the previous operational version; the equatorial temperature biases are reduced and equatorial currents are im- proved. The impact of assimilation in the ocean state is discussed by diagnosis of the assimilation increment and bias correction terms. The resulting analysis not only improves the fit to the data, but also improves the respresentation of the interannual variability.