A high-resolution numerical ocean model is used to examine the interannual variability of the upper ocean vorticity budget in the Gulf of Alaska. A circulation equation is derived for a layer representative of the upper ocean. The equation is a balance of the area integral of vorticity over the domain with the time-and area-integrated vorticity flux through the layer top, bottom, and lateral boundaries and dissipation. Time series of each component of the equation are constructed and examined for interannual variability. Other native and derived model variables are analyzed to facilitate explanation of observed interannual variability. The model data show that interannual fluctuations in the time rate of change of the circulation in the Gulf of Alaska are small compared to the rate at which the dominant sources and sinks feed and drain vorticity from the domain. Variability on interannual timescales is predominantly due to atmospheric and oceanic teleconnections originating with the El Ni¿o-Southern Oscillation. Direct forcing of the wind on the ocean is the strongest driving mechanism for interannual variability of the gyre circulation. However, large fluctuations in the wind forcing are partially balanced by other processes. El Ni¿o events excite downwelling coastal Kelvin waves that propagate northward along the eastern continental margin of the northeast Pacific Ocean. Arrival of the Kelvin waves at the peak of the annual cycle of the Alaskan Current triggers baroclinic instabilities that result in the formation of a coast-wide train of large anticyclonic eddies. The more southerly of these eddies tend to propagate to the southwest, advecting negative vorticity out of the Gulf of Alaska. This net gain of vorticity partially balances the contemporaneous reduction of vorticity input to the region by the wind stress curl. Excess vorticity is advected out of the region in the Alaskan Stream to maintain the circulation over longer timescales. ¿ 2001 American Geophysical Union