Altimetry data from the first 7-yr TOPEX/Poseidon (T/P) mission (October 1992–September 1999) are analyzed to investigate the interannual variability in regions of the Kuroshio Extension and its southern recirculation gyre. Large-scale, interannual changes of the Kuroshio Extension system are characterized by the oscillation between an elongated state and a contracted state. In the elongated state, the Kuroshio Extension has a larger eastward surface transport, a greater zonal penetration, and a more northerly zonal-mean path. All these characteristics are closely connected to the presence of an intense, zonally elongated southern recirculation gyre. In its contracted state, the Kuroshio Extension has a smaller eastward surface transport, a more southerly mean path, and is accompanied by a weaker southern recirculation gyre. During the T/P period, the Kuroshio Extension changed from the elongated state in 1992–93 to the contracted state in 1996–97, and back to the elongated state since late 1997. In addition to these large-scale changes, the mesoscale eddy field also exhibited prominent interannual changes in the Kuroshio Extension region. In the upstream region between the Izu Ridge and the Shatsky Rise, the eddy kinetic energy level was generally low while the Kuroshio Extension was in its elongated state, and high while in the contracted state. Downstream of the Shatsky Rise, on the other hand, the EKE level was high (low) when the Kuroshio Extension was in the elongated (contracted) state. The large-scale, interannual changes in the Kuroshio Extension system have a significant impact on the regional wintertime SST anomaly field: the warm (cold) wintertime SST anomalies tend to persist in years when the Kuroshio Extension is in its elongated (contracted) state. A diagnostic analysis of the surface ocean heat balance indicates that the nonseasonal geostrophic advection by the ocean circulation works to reduce (increase) the wintertime SST anomalies when the Kuroshio Extension changes from an elongated (contracted) state to a contracted (elongated) state. The SST anomalies associated with the large-scale changes of the Kuroshio Extension have an area-averaged, peak-to-peak amplitude of >1°C and appear independent of the interannual SST changes in the tropical Pacific Ocean.