More than 85% of Australians live near the coast, resulting in a high density of coastal infrastructure and population exposed to the destructive effects of extreme sea levels caused by storms. Recent technological advances allow for realistic high-resolution numerical models capable of analysing dynamics to better understand how storms will impact the coastline and even predict such events. These advanced models provide coastal planners and emergency managers with invaluable tools, such as inundation maps, to better prepare for and deal with disaster related to surges in sea level. One of the most destructive storms in Western Australia was Cyclone Alby in 1978, which caused an estimated $39 million dollars' damage and killed five people. Large waves and extreme surges caused coastal erosion and inundation across the south-west of the state. Using an advanced, high-resolution (in the coastal zone ~100 metres) 3D finite element model, coupled with a state-of-the art wave model, we resolved the dynamical response of the sea surface to Cyclone Alby and examined the inundation effects of the storm. Significant waves in the storm region were around 10 metres, which agreed with ship observations. The two-way, coupled modelling approach better represented wind stress over the sea, taking into account wave surface roughness and dynamics. In the coastal regions, including waves in the model gave estimates of wave-induced setup along the coast and showed a closer fit with observed water levels compared with other commonly applied storm surge models. The predicted onset, magnitude, and duration of the surge events were similar to reported values. The surge from Alby reached up to 1.6 metres in Busselton, with approximately 25% of the height resulting from wave effects included in the model.