Zonally symmetric fluctuations of the midlatitude westerly winds characterize the primary mode of atmospheric variability in the Southern Hemisphere during all seasons. This is true not only in observations but also in an unforced 15 000-yr integration of a coarse-resolution (R15) coupled ocean–atmosphere model. Here it is documented how this mode of atmospheric variability, known as the Southern Annular Mode (SAM), generates ocean circulation and sea ice variations in the model integration on interannual to centennial timescales that are tightly in phase with the SAM. The positive phase of the SAM is associated with an intensification of the surface westerlies over the circumpolar ocean (around 60°S), and a weakening of the surface westerlies farther north. This induces Ekman drift to the north at all longitudes of the circumpolar ocean, and Ekman drift to the south at around 30°S. Through mass continuity, the Ekman drift generates anomalous upwelling along the margins of the Antarctic continent, and downwelling around 45°S. The anomalous flow diverging from the Antarctic continent also increases the vertical tilt of the isopycnals in the Southern Ocean, so that a more intense circumpolar current is also closely associated with positive SAM. In addition, the anomalous divergent flow advects sea ice farther north, resulting in an increase in sea ice coverage. Finally, positive SAM drives increases in poleward heat transport at about 30°S, while decreases occur in the circumpolar region. Ocean and sea ice anomalies of the opposite sign occur when the SAM is negative. The ocean and sea ice fluctuations associated with the SAM constitute a significant fraction of simulated ocean variability poleward of 30°S year-round. The robustness of the mechanisms relating the SAM to oceanic variability suggests that the SAM is likely an important source of large-scale variability in the real Southern Hemisphere ocean.