Abstract: A motion compensation winch has a number of operating modes to launch and recover a boat and take into account wave movement. The winch has a cable drum for winding a cable thereon, a secondary gear reduction to rotate the drum, a primary gear reduction between a hydraulic motor shaft and the secondary gear reduction, a rotational sensor to sense direction of cable drum rotation, a load sensor to determine when a tension on the cable is above or below a predetermined value and a secondary clutch to disengage the cable drum and permit the cable drum to rotate freely. The winch has a manual mode for manual operation, and four operational modes, an automatic launch mode, a motion compensation mode to keep the cable taut while a boat rises and falls on waves, a free wheel mode and a recovery mode for recovering a boat that is rising and falling on waves.