Abstract. Version 2 of the unstructured-mesh Finite-Element Sea ice–Ocean circulation Model (FESOM) is presented. It builds upon FESOM1.4 (Wang et al., 2014) but differs by its dynamical core (finite volumes instead of finite elements), and is formulated using the arbitrary Lagrangian Eulerian (ALE) vertical coordinate, which increases model flexibility. The model inherits the framework and sea ice model from the previous version, which minimizes the efforts needed from a user to switch from one version to the other. The ocean states simulated with FESOM1.4 and FESOM2.0 driven by CORE-II forcing are compared on a mesh used for the CORE-II intercomparison project. Additionally, the performance on an eddy-permitting mesh with uniform resolution is discussed. The new version improves the numerical efficiency of FESOM in terms of CPU time by at least 3 times while retaining its fidelity in simulating sea ice and the ocean. From this it is argued that FESOM2.0 provides a major step forward in establishing unstructured-mesh models as valuable tools in climate research.