The mission of an unmanned air vehicle (UAV) tethered to a small unmanned surface vehicle (USV) is considered. The tether doubles as a power umbilical and communications link, providing unlimited flight duration and secure data transfer while limiting mobility. Contrary to the majority of existing tethered UAV work which assumes a taut tether for dynamic stability, this dissertation addresses the challenge of tether management for a slack, hanging tether in a dynamic ocean environment up to sea state 4 on the Douglas scale. For controlled laboratory experimentation, a novel wave and boat motion replication mechanism is developed capable of replicating motion up to 2.2 m heave, 32◦ roll, and 35◦ pitch. A reference hanging tether model maximizes heave robustness, providing a target tether length, departure angle, and tension. An effective estimation and control strategy is presented and validated indoor through motion capture experimentation and outdoor using a differential global positioning system solution. Finally,the foundation toward a simulation model of the complete tethered UAV - USV team is developed. The dynamic partial differential equations of motion are derived by treating the tether as a continuous body using Hamilton’s principle of least action. A simulation model is then developed, discretizing the elastic tether with linear and quadratic shape functions. Finally, the simulation results are experimentally validated.