Observations show that tropical and extratropical Pacific SST anomalies vary out-of-phase, and that the atmospheric meridional Hadley and zonal Walker Circulations are related to these variations. A tropical-extratropical model is constructed to show oscillations consistent with observations. The positive feedback introduced by the Walker Circulation causes tropical warming so that the air rises and flows toward the subtropics where it sinks. When the sinking air approaches the sea surface, it flows both equatorward and poleward enhancing tropical easterly and extratropical westerly winds, respectively. Enhanced extratropical westerlies increases wind speed and hence evaporation, resulting in extratropical cooling. The Walker and Hadley Circulations thus result in tropical warming and extratropical cooling, respectively. The tropical warming and extratropical cooling increase the meridional SST difference and hence the meridional heat transport which erodes the tropical warming and extratropical cooling. Enhanced tropical easterlies due to the Hadley Circulation cools the tropical ocean through ocean dynamics. These negative feedbacks help the system to switch from warm to cold phases, and vice versa. ¿ 1998 American Geophysical Union