<jats:title>Abstract</jats:title><jats:p>A novel concept for parameterizing internal wave–mean flow interaction in ocean circulation models is extended to an arbitrary two-dimensional flow with vertical shear. The concept is based on the description of the entire wave field by the wave-energy density in physical and wavenumber space and its prognostic computation by the radiative transfer equation integrated in wavenumber space. Energy compartments result for the horizontal direction of wave propagation as additional prognostic model variables, of which only four are taken here for simplicity. The mean flow is interpreted as residual velocities with respect to the wave activity. The effect of wave drag and energy exchange due to the vertical shear of the residual mean flow is then given simply by a vertical flux of momentum. This flux is related to the asymmetries in upward, downward, alongflow, and counterflow wave propagation described by the energy compartments. A numerical implementation in a realistic eddying ocean model shows that the wave drag effect is a significant sink of kinetic energy in the interior ocean.</jats:p>