Abstract A global isopycnal coordinate GCM is used to investigate the processes that drive the meridional circulation, transformation, and interocean exchange of water masses in the Southern Ocean. The noneddy-resolving model (mesh size 1.25°) includes an active mixed layer, parameterized bolus transport, and seasonally varying surface fluxes. The model gives a plausible picture of the formation and circulation of subantarctic mode water (SAMW) and Antarctic Intermediate Water (AAIW). Progressively denser versions of SAMW and AAIW form in the Indian and Pacific Oceans as the Antarctic Circumpolar Current drifts south and loses buoyancy. SAMW forms predominantly in the Indian Ocean, at a rate of 20 Sv (Sv ≡ 106 m3 s−1), while AAIW forms mainly in the Pacific sector, at a rate of 8.5 Sv. Throughout the circumpolar zone 25°–42.5°S, there is a net formation of 11 Sv of SAMW, largely by surface cooling. This SAMW is exported northward across 25°S into the subtropical gyres. The properties, distribution, and re...