Seasonal and interannual variations of summer upwelling off the South Vietnam coast and the offshore spread of cold water are investigated using a suite of new satellite measurements. In summer, as the southwesterly winds impinge on Annam Cordillera (a north-south running mountain range on the east coast of Indochina) a strong wind jet occurs at its southern tip offshore east of Saigon, resulting in strong wind curls that are important for ocean upwelling off the coast. In July and August an anticyclonic ocean eddy develops to the southeast, advecting the cold coastal water offshore into the open South China Sea (SCS). The center of this cold filament is located consistently north of the wind speed maximum, indicating that open-ocean upwelling helps to cool the ocean surface. Corroborating evidence for the cold filament is found in ocean color observations that reveal a collocated tongue of high chlorophyll concentration. The development of this cold filament disrupts the summer warming of the SCS and causes a pronounced semi-annual cycle in SST. Moreover, the cold filament is an important player in interannual variability in the summer SCS. In 1998, the cold filament and mid-summer cooling never took place, giving rise to a strong basin-wide surface warming. Interannual SST variance has a local maximum over the climatological cold filament, and is much greater than the variance over the adjacent Indian and western Pacific Oceans. A cold filament index is constructed, which displays significant lagged correlation with SST in the eastern equatorial Pacific and Indian Oceans, indicative of a teleconnection from El Nino.