Repeated observations in the North Pacific subtropical gyre near Hawaii reveal pronounced freshening (~0.15 psu) and cooling (~0.5 ¿C) of the upper thermocline from 1991 through 1997. The freshening appears progressively later on deeper isopycnals consistent with subduction of surface salinity anomalies at higher latitudes and subsequent southward advection. Winter rainfall anomalies in the central North Pacific are dominated by the El Ni¿o/Southern Oscillation (ENSO) phenomenon and by the Pacific Decadal Oscillation (PDO), with the wet phase of the PDO leading the observed freshening. The reversal of the freshening trend in the upper thermocline is related both to extreme drought near Hawaii during the 1997--98 ENSO, and to protracted drought associated with the PDO. The density compensation of decadal thermal anomalies by salinity anomalies means that they do not disperse dynamically, and that the hydrological cycle is an active component of decadal climate variability in the North Pacific. ¿ 2001 American Geophysical Union