Sea level variations in the Indian Ocean north of 20¿S are analyzed from Geosat satellite altimeter data in 1987--1988. These observed variations are compared with numerical simulations from a reduced-gravity model forced by observed winds over the same period. The first complex empirical orthogonal function of observed and simulated variations is an annual signal. For this signal, observations and simulations are highly correlated in both time and space. Off-equatorial sea level variations propagate westward and poleward as Rossby waves. The strongest annual variations occur in the southeastern tropical Indian Ocean. The maximum amplitude (~12 cm) is located at about 90¿E, 12¿S, although the wind stress curl is weak there and east of it. The signal propagates from the eastern boundary to the southwest across almost all the basin. ¿ American Geophysical Union 1992