The dynamics and influence of the connection between the Pacific and Indian Oceans in the Indonesian Archipelago (PACIO) on the upper tropical Pacific and Indian Oceans are investigated using a reduced gravity global model. Two different model geometries are used; the first has an open PACIO region (open case) that permits normal transport, the second has a closed PACIO region (closed case) that allows no transport. The model is forced by either monthly 1980–1989 European Centre for Medium-Range Weather Forecasting wind stresses or by an imposed Rossby wave pulse. The average upper layer thickness of the Indian Ocean is significantly greater and more variable because of the influence of PACIO transport. The effect in the Pacific Ocean is much smaller, and there appears to be no appreciable effect of PACIO transport on interannual variability in the eastern tropical Pacific Ocean. RMS differences between the open and closed cases show areas of low-frequency (> ½ year) variability over most of the southern Indian Ocean, the western boundary of the Indian Ocean, the region of the Mindanao Eddy, and the eastern equatorial Pacific waveguide. Areas of significant high-frequency variability are the East African Coastal Current, the Mindanao Eddy region, the Coral Sea Basin, and in the eastern equatorial Pacific waveguide. The large effect on the southern Indian Ocean is linked to off-equatorial Rossby waves generated by transport through the PACIO region.