The Bay of Fundy in eastern Canada has the world's largest tidal range of over 16 m with tidal currents up to 5 ms−1 making it an ideal place for tidal power extraction using tidal in-stream energy conversion devices in the Minas Passage. Field observations collected from ship-based and bottom-moored sensors over an 8-day period in 2013 are used to validate a 3D hydrodynamic and sediment transport model of the Minas Basin with measurements of water levels, current profiles, waves, suspended sediment fluxes and suspended sediment concentration (SSC) profiles. The sediment conditions are initialized using a bi-modal sediment distribution map and the model simulates both cohesive and non-cohesive sediments in the Minas Basin. Model results for fine-grained suspended sediment concentrations are compared horizontally, vertically, and temporally to observations and indicate strong data-model agreement for SSC from 5 to 287 mg L−1. The implications of constructing a large-scale turbine farm within the Minas Passage and the impacts on suspended sediment within the Minas Basin are investigated using the model. The farm is simulated by adding semi-permeable structures that use an energy loss term in the fluid momentum equations to parameterize turbine regions in the hydrodynamic model. The results emphasize the sensitivity of the system to changes in flow and suggest that a large-scale tidal energy farm that extracts maximum power could reduce SSC by 37% on average across the basin which would influence physical and biological processes particularly on the fine-grained intertidal areas around the macrotidal basin.