The variability of the Arctic circulation is investigated for a 43 year period (1951--1993) from a coupled ice-ocean model. Empirical orthogonal function (EOF) analysis shows that the variability of the sea surface height (SSH) and vertically integrated transport is organized so that in the leading mode the whole Arctic operates as a single gyre. The mode is associated with the Arctic Oscillation (AO) <Thompson and Wallace, 1998>, and it explains over 70% of the variance in the vertically integrated transport and 25% of the SSH variability. The physical interpretation of this mode is derived to arise from its close connection to the Atlantic inflow to the Arctic. The mode shows a major shift toward cyclonic circulation in the end of the 1980s which is associated with a large multiyear pulse of Atlantic water to the Arctic. Thus this event appears as the likely initiation of the Atlantic layer warming observed during the recent years <Carmack et al., 1995>. Overall, the first mode shows strong decadal variability as reported by Proshutinsky and Johnson <1997>. The second mode of the oceanic circulation, which explains 9% of the variance in the transport, contains two gyres with opposing cyclonicity in the Eurasia and Canada basins. It projects onto the North Atlantic Oscillation (NAO) pattern and displays a 14 year cycle which is known to exist in the midlatitude North Atlantic surface temperatures <Deser and Blackmon, 1993>. A further examination reveals that this mode describes the variability of the flow through the Barents Sea, which is modulated by the water mass modification due to the local heat flux variability. The apparent NAO connection is provided by a simultaneous correlation between the time series of this second mode and the leading heat flux mode in the North Atlantic which is associated with NAO. ¿ 2000 American Geophysical Union