The interaction between the mesoscale eddies and the cyclonic gyre circulation of the Lofoten Basin is studied using a suite of satellite altimeters, a regional coupled ocean-sea-ice data assimilation system (the TOPAZ reanalysis) and Argo float data. An automated method identified 5,373/5,589 individual anticyclonic/cyclonic eddies in the Lofoten Basin from more than 65,000 altimeter-based eddy observations, of which 70–85% are found to be nonlinear. The nonlinearity of eddies is estimated from its translational and rotational velocities. The study found clustering of highly intense nonlinear eddies on either side of the Lofoten Basin. Further, we show the distinct cyclonic drift of the anticyclonic and cyclonic eddies, both confined to the western side of the basin, and its similarity to the middepth gyre circulation also confined to the same region. A well-defined cyclonic drift pattern of eddies is found during the time period when the gyre circulation of the basin is strengthened, while a clear cyclonic drift of eddies is absent during a weakened gyre. Analysis of barotropic energy conversion in the reanalysis data shows maximum transfer of energy from the eddy field to the mean flow in the Lofoten Vortex region. Even though comparatively smaller (roughly 9 times) there is also notable transfer of energy from the mean flow to the eddies in the region located outside the Lofoten Vortex. Our study shows that the gyre circulation when strengthened, receives more energy from the Lofoten Vortex and loses less energy to those eddies circulating around the Lofoten Vortex.