[1] This study reveals that a quasi‐decadal variability exists in the climate system of southern high latitudes, particularly in the Southern Annular Mode (SAM) and subpolar to mid latitudes sea surface temperature (SST), based on in situ observations, reanalysis data, and the 20th Century runs of IPCC AR4 coupled climate models. Spectral analysis reveals that a statistically significant variability with periods of 8–16 years appears in the SAM indices based on about 50 years of reanalysis data and observed SST. Observations of air temperature and sea level pressure from weather stations confirm that the decadal variability is more evident in the midlatitudes than over Antarctica. Cross‐spectral analysis indicates that the SAM index is related to the SST in the subpolar seas of Antarctica and SST gradient at mid‐high latitudes at this decadal frequency band. The SAM indices from 20th century runs (longer than 100 years) of eighteen IPCC coupled climate models are also examined for the decadal variability. Sixteen out of the eighteen models exhibit decadal variability in SAM that is significant at least at the 90% of confidence level while eight are significant at the 95% confidence level. Seven models produce significant co‐variability between SAM and subpolar SST at this quasi‐decadal frequency.