Abstract Previous observational studies have indicated that mesoscale convective systems (MCSs) contribute the majority of precipitation over the Bay of Bengal (BoB) during the summer monsoon season, yet their initiation and propagation remain incompletely understood. To fill this knowledge gap, we conducted a comprehensive study using a combination of 20-yr satellite observations, MCS tracking, reanalysis data, and a theoretical linear model. Satellite observations reveal clear diurnal propagation signals of MCS initiation frequency and rainfall from the west coast of the BoB toward the central BoB, with the MCS rainfall propagating slightly slower than the MCS initiation frequency. Global reanalysis data indicate a strong association between the offshore-propagating MCS initiation frequency/rainfall and diurnal low-level wind perturbations, implying the potential role of gravity waves. To verify the hypothesis, we developed a 2D linear model that can be driven by realistic meteorological fields from reanalysis. The linear model realistically reproduces the characteristics of offshore-propagating diurnal wind perturbations. The wind perturbations, as well as the offshore propagation signals of MCS initiation frequency and rainfall, are associated with diurnal gravity waves emitted from the coastal regions, which in turn are caused by the diurnal land–sea thermal contrast. The ambient wind speed and vertical wind shear play crucial roles in modulating the timing, propagation, and amplitude of diurnal gravity waves. Using the linear model and satellite observations, we further show that the stronger monsoonal flows lead to faster offshore propagation of diurnal gravity waves, which subsequently control the offshore propagation signals of MCS initiation and rainfall. Significance Statement Rainfall over the Bay of Bengal (BoB) is primarily contributed by large and organized rainfall systems in the summer monsoon season. During this season, these systems are commonly observed over the east coast of India around midnight, the western BoB in the morning, and the central BoB in the afternoon. This eastward rainfall propagation is confirmed by observations, reanalysis data, and a theoretical model to have a strong association with atmospheric diurnal gravity waves. These waves are caused by land–sea thermal contrast and can trigger rainfall systems over the offshore regions. We also found that the diurnal gravity waves, as well as their triggered rainfall systems, can be greatly modulated by the large-scale monsoonal flows. All the above findings improve our understanding of diurnal rainfall cycle over the BoB and may contribute to the future improvement of rainfall forecast over the region.