Repeat hydrographic and XBT sections and satellite altimetry obtained over the last decade have allowed the interannual variability of the Australian sector of the Southern Ocean to be examined for the first time. Here we focus on the vertical structure and dynamics of interannual temperature anomalies. Sea surface temperature anomalies are highly correlated with subsurface temperature anomalies across much of the width of the Southern Ocean. In the thick thermostad of the Subantarctic Mode Water (SAMW) this correlation can be explained by deep mixing in winter. The deep mixing homogenizes the mode water pool, communicating surface anomalies to depth. The interannual anomalies of temperature and salinity in the mode water are too large, and too well-correlated, to be the result of anomalous air-sea heat and freshwater flux. Rather, the SAMW variability reflects changes in wind forcing, through Ekman transport of anomalous water properties across the Subantarctic Front. At other latitudes, regions of high correlation between surface and subsurface temperature anomalies coincide with the location of the main fronts of the Antarctic Circumpolar Current (ACC). This suggests that temperature anomalies in these regions largely reflect the translation of the temperature gradients associated with the ACC fronts, driven by changes in wind stress curl. The frontal nature of the ACC therefore appears to be fundamental to the dynamics of interannual variability of water properties in the Southern Ocean: models of ocean and coupled ocean-atmosphere anomalies (e.g. the Antarctic Circumpolar Wave) likely need to include a representation of the ACC fronts to correctly represent the dynamics of the variability.