The role of the annual cycle in driving long-term variations in high-latitude oceans is studied in a zonally-averaged ocean model coupled with a thermodynamic sea-ice model. When the model is forced by surface fluxes whose seasonalities are idealized sinusoidally, subharmonic oscillations on interdecadal time scales arise due to a delicate interplay between surface heat and freshwater fluxes, sea-ice extent, oceanic heat transport, and convective overturning. It is shown that the seemingly zero-net-gain annual cycle of winter freezing and summer melting may actually drain salts from the surface layer to the deeper ocean, leading to freshening of the upper ocean. This mechanism, when coupled with sea-ice feedback, produces a self-sustaining inter-decadal oscillation. Parallel numerical experiments that use steady surface forcings do not generate such oscillations. This study highlights an important aspect of the annual cycle in forcing interannual to decadal time scale climate variations. ¿ American Geophysical Union 1996