The formation mechanisms and pathways of intermediate water in the Southern Ocean are analyzed from output of a high-resolution ocean general circulation model. Deep winter mixed layer formation in the Southern Ocean is diagnosed from the model results and is found to be mostly consistent with observations. Diapycnal water mass transformations by air-sea fluxes and internal mixing are quantified and split into mean and eddy components. The diapycnal formation of the water masses that constitute the Antarctic intermediate water layer in the southeast Pacific is found to occur mainly in the western Pacific Ocean in this model. In winter, convection up to 900 m is found to set the potential vorticity characteristics of this layer. Eddy fluxes of heat and buoyancy play an important role in the formation of the intermediate waters by transferring water from the southern parts of the subtropical gyres into the Antarctic Circumpolar Current (ACC) and vice versa. The effects of eddy fluxes are found to vary significantly along the path of the ACC. They are strongly concentrated in the regions near the Agulhas Return Current in the Indian Ocean and the Brazil-Malvinas Confluence in the Atlantic.