Warmer (>28°C) sea surface temperature (SST) occurs in the South Eastern Arabian Sea (SEAS, 5°N–13°N, 65°E–76°E) during March–April, and is known as the Arabian Sea Mini Warm Pool (ASMWP). In this study, we address the role of salinity and the upper layer heat and salt budgets in the formation and collapse of this ASMWP. An assessment of Level 3 sea surface salinity (SSS) data from the Soil Moisture and Ocean Salinity (SMOS) satellite mission for the year 2010 shows that SMOS is able to capture the SSS variability in the SEAS. Analysis of temperature, salinity and currents from the Hybrid Coordinate Ocean Model during 2003–06, and, in situ temperature and salinity data from Argo floats during 2003–06 for the SEAS revealed that low salinity waters cap the top 60 m of the SEAS in January–February. This minimum salinity was concurrent with the formation of a barrier layer and with the time when the SEAS gained little net heat flux and the equatorward flowing East India Coastal Current (EICC) fed low saline waters into the SEAS. Subsequently, the net heat flux increased to a peak value under the increased salinity stratification, leading to the formation of the ASMWP in March–April. The ASMWP collapsed by May due to increase in SSS and the associated weakening of the salinity stratification. The monsoon onset vortex in May 2004 could be related to the minimum SSS that occurred in February 2004, followed by higher SST and heat content of the ASMWP in April 2004.