During a typical Indian Ocean Dipole mode (IOD) event the weakening and reversal of winds in the central equatorial Indian Ocean lead to the development of unusually warm sea surface temperatures (SSTs) in the western Indian Ocean. Here we report an analysis of model results and observations for the 1990--1999 period, showing the anomalous warming that occurred during 1997--1998 and 1994--1995 IOD events in the western Indian Ocean. It was primarily the result of the internal oceanic processes within the Arabian Sea rather than a direct response to external forcing from the eastern Indian Ocean as previously suggested. We compare the evolution of subsurface temperatures in the Arabian Sea just prior to (1996--1997: Representative of a normal year) and during the IOD event (1997--1998) to infer the physical processes responsible for the anomalous warming during the IOD events. In a normal year such as 1996 the existence of a unique open ocean upwelling feature, the Arabian Sea Dome (ASD), raises the thermocline in the southern Arabian Sea, a result of the positive wind stress curl of the winter monsoon. During an IOD year (1997), with the collapse of the monsoon wind system in the Arabian Sea the cold tongue, the strip of cool water indicative of ASD that normally occupies the southern Arabian Sea, fails to develop. As a result, the thermocline remains deep, which in turn enhances the heat content of the upper ocean, leading to warm SSTs. Volume-integrated heat budget terms in the ASD region illustrate the role of horizontal and vertical advection in the upper ocean warming. An implication is that SSTs remain higher than 28¿C in the southern Arabian Sea, thereby supporting large-scale deep convection in the atmosphere during the winter monsoon. A band of deep convective cloud forms directly over the warm ASD region during the IOD events, which bring greater than average rainfall over the southern Arabian Sea and east Africa, whereas convection is suppressed over the cold ASD region during the normal years resulting in less than average rainfall.