A 50-year coupled atmosphere-ocean model integration is used to study sea surface temperature (SST) and mixed layer depth (h), and the processes which influence them. The model consists of an atmospheric general circulation model coupled to an ocean mixed layer model in ice-free regions. The midlatitude SST variability is simulated fairly well, although the maximum variance is underestimated and located farther south than observed. The model is clearly deficient in the vicinity of the Gulf Stream and in the eastern tropical Pacific where advective processes are important. The model generally reproduces the observed structure of the mean h in both March and September but underestimates it in the North Atlantic during winter. The net surface heat flux strongly regulates both the mean ( ¿) and the anomalous (') SSTs throughout the year. The entrainment heat flux, which is proportional to the product of the entrainment rate (We) and the temperature jump at the base of the mixed layer (ΔT), influences SSTs in summer and fall, especially north of ~35 ¿N (45 ¿N) in the Pacific (Atlantic). WeΔT is more important for the development of SST' in fall compared to We'ΔT, which is larger in summer. The entrainment rate is dominated by wind-induced mixing in summer and surface buoyancy forcing in winter; the density jump at the base of the mixed layer is of secondary importance. In addition, anomalies in h have a significant impact on the heat balance of the mixed layer during spring and summer. Deep winter mixed layers and the storage of thermal anomalies beneath the shallow mixed layer in summer leads to large winter-to-winter persistence of SST anomalies in the far North Atlantic, in accord with observations and stochastic climate theory. ¿ 2000 American Geophysical Union