In recent years, the Indian Ocean (IO) has been discovered to have a much larger impact on climate variability than previously thought. This paper reviews climate phenomena and processes in which the IO is, or appears to be, actively involved. We begin with an update of the IO mean circulation and monsoon system. It is followed by reviews of ocean/atmosphere phenomenon at intraseasonal, interannual, and longer time scales. Much of our review addresses the two important types of interannual variability in the IO, El Niño–Southern Oscillation (ENSO) and the recently identified Indian Ocean Dipole (IOD). IOD events are often triggered by ENSO but can also occur independently, subject to eastern tropical preconditioning. Over the past decades, IO sea surface temperatures and heat content have been increasing, and model studies suggest significant roles of decadal trends in both the Walker circulation and the Southern Annular Mode. Prediction of IO climate variability is still at the experimental stage, with varied success. Essential requirements for better predictions are improved models and enhanced observations.