A nonlinear reduced gravity model with four active layers and mixed layer physics is used to investigate how precipitation anomalies affect salinity and temperature variability in the Indian Ocean. In one experiment the model is forced by observations of monthly varying winds and rainfall for the period 1980--2000. In another it is forced by the same winds and climatological rainfall. Comparison between the two experiments is focused on the 1992--2000 period, during which rainfall variations attain extrema in the southeastern Indian Ocean with two deficits close to zero in 1994 and 1997 and a maximum of 16 mm/d in 1998. Rainfall anomalies significantly affect model sea surface salinity (SSS), but SSS is also highly governed by winds. Indeed, SSS is at its absolute minimum in 1994 despite the local rainfall deficit. Sea surface temperature (SST) is strongly affected along the equator east of 80¿E and along Indonesia where the mixed and the barrier layers become thin in 1994 and 1997. There the precipitation deficits affect SST primarily by entraining more subsurface water to the surface. In 1994 the subsurface waters are anomalously cool because of eastward advection of colder water from the west. In 1997 they are so because of northward advection of water cooled by coastal upwelling farther south. The precipitation excess does not affect SST because the temperature difference between the mixed layer and the barrier layer is very little then. Including interannual rainfall anomalies makes SST off Sumatra colder in 1994 and 1997, in much better agreement with observations.