The diffraction of water waves by a vertical circular cylinder is considered in the regime where the wave amplitude A and cylinder radius a are of the same order, and both are small compared to the wavelength. The wave slope is small, and a conventional linear analysis applies in the outer domain far from the cylinder. Significant nonlinear effects exist in the complementary inner domain close to the cylinder, associated with the free-surface boundary condition. Using inner coordinates scaled with respect to a, it is shown that the leading-order nonlinear contribution to the velocity potential includes terms proportional to both A2a and A3. The wave load which acts on the cylinder near the free surface includes second- and third-harmonic components which are proportional respectively to A2a2 and A3a. In a conventional perturbation analysis, where A [Lt ] a, these components would be ordered in magnitude corresponding to the different powers of A, but here they are of the same order. The second- and third-order components of the total force are of comparable magnitude for practical values of the wave slope.