A full two-way nesting approach for split-explicit, free surface ocean models is presented. It is novel in three main respects: the treatment of grid refinement at the fast mode (barotropic) level; the use of scale selective update schemes; the conservation of both volume and tracer contents via refluxing. An idealized application to vortex propagation on a β plane shows agreement between nested and high resolution solutions. A realistic application to the California Current System then confirm these results in a complex configuration. The selected algorithm is now part of ROMS_AGRIF. It is fully consistent with ROMS parallel capabilities on both shared and distributed memory architectures. The nesting implementation authorizes several nesting levels and several grids at any particular level. This operational capability, combined with the inner qualities of our two-way nesting algorithm and generally high-order accuracy of ROMS numerics, allow for realistic simulation of coastal and ocean dynamics at multiple, interacting scales.