Abstract In this second part of a two-part paper, the mechanism for the amplitude asymmetry of SST anomalies (SSTA) between positive and negative Indian Ocean dipole (IOD) events is investigated through the diagnosis of coupled model simulations. Same as the observed in Part I, a significant negative skewness appears in the IOD east pole (IODE) in September–November (SON), whereas there is no significant skewness in the IOD west pole (IODW). A sensitivity experiment shows that the negative skewness in IODE appears even in the case when the ENSO is absent. The diagnosis of the model mixed layer heat budget reveals that the negative skewness is primarily induced by the nonlinear ocean temperature advection and the asymmetry of the cloud–radiation–SST feedback, consistent with the observation (Part I). However, the simulated latent heat flux anomaly is greatly underestimated in IODE during the IOD developing stage [June–September (JJAS)]. As a result, the net surface heat flux acts as strong thermal damping. The underestimation of the latent heat flux anomaly in the IODE is probably caused by the westward shift of along-coast wind anomalies off Sumatra.