The interannual Indian Ocean subtropical dipole (IOSD) event in the southern Indian Ocean is discussed using a coupled general circulation model to derive a scenario describing its complete life cycle for the first time. The positive (negative) IOSD is characterized by an anomalous warm (cool) sea surface temperature (SST) in the southwestern region of the Indian Ocean and by an anomalous cool (warm) SST in the southeastern region. The positive event brings about enhanced precipitation in the southeastern Africa during the peak phase. Composite pictures for the positive and negative IOSD clarify that an anomalous latent heat flux is the dominant factor in its formation. This flux anomaly is caused by an anomaly in the climatological wind field, which is associated with a pressure anomaly in the central region of the southern Indian Ocean. Since the flux anomaly starts during austral fall in the year previous to the event peak and develops for the next 9 months, air-sea interaction must play an active role in the formation of the IOSD. The reason the peak of the IOSD is locked to the austral summer is that the latent heat flux influences the sea surface temperature most efficiently in the austral summer when the depth of the surface mixed layer is shallowest.