AbstractWe analyse patterns of North Atlantic air–sea interaction in observations and model output throughout the annual cycle with the dual aims of validating natural variability in climate models, and quantifying seasonal predictability of the atmosphere and of ocean surface temperatures.The Met Office's HadCM3 coupled ocean–atmosphere model is shown to represent well the atmospheric forcing of sea surface temperature (SST) in the North Atlantic region through the action of latent‐heat fluxes. Winter ocean temperature anomalies in both observations and model appear to be preserved below the shallow summer mixed layer and to re‐emerge in the following autumn.We find observational evidence from the last half of the twentieth century for SST forcing of the atmospheric circulation in the North Atlantic region. Results validate our atmospheric model (HadAM2b) and confirm the levels of potential predictability of the North Atlantic Oscillation (NAO) that have been found in recent modelling studies. We suggest that the ultimate correlation skill of a winter NAO hindcast in this period is in the range 0.45 to 0.63.Analysis of observational and atmospheric model data from the first half of the twentieth century identifies very little predictability of the winter NAO. We suggest that the change in seasonal predictability is genuine and may be related to the strength of decadal oscillations.The ocean–atmosphere model, which incorporates a different atmospheric component (HadAM3), fails to show a causal link between North Atlantic temperatures and the atmospheric circulation even during periods where low‐frequency variability is as strong as in the recent observations.A brief observational investigation suggests that any implied predictability of the winter NAO based on a knowledge of South Atlantic SSTs depends on the existence of secular trends in the data. Tropical Pacific SSTs appear to influence the winter climate of the North Atlantic region, but not via trends in the NAO. © Crown copyright, 2002.