A domain decomposition method is developed to solve the problem of wave motion inside a harbor with its surface covered by an ice sheet. The shape of the horizontal plane of the harbor can be arbitrary while the sidewall is vertical. The entrance of the harbor is open to the sea with a free surface. The linearized velocity potential theory is adopted for fluid flow, and the thin elastic plate model is applied for the ice sheet. The domain is divided into two subdomains. Inside the harbor, the velocity potential is expanded into a series of eigenfunctions in the vertical direction. The orthogonal inner product is adopted to impose the impermeable condition on the harbor wall, together with the edge conditions on the intersection of the harbor wall and the ice sheet. In the open sea outside of the harbor, through the modified Green function, the velocity potential is written in terms of an integral equation over the surface of the harbor entrance, or the interface between the two subdomains. On the interface, the orthogonal inner product is also applied to impose the continuity conditions of velocity and pressure as well as the free ice edge conditions. Computations are first carried out for a rectangular harbor without the ice sheet to verify the methodology, and then extensive results and discussions are provided for a harbor of a more general shape covered by an ice sheet with different thicknesses and under different incident wave angles