Abstract A study of the formation and propagation of volume anomalies in North Atlantic Mode Waters is presented, based on 100 yr of monthly mean fields taken from the control run of the Third Hadley Centre Coupled Ocean–Atmosphere GCM (HadCM3). Analysis of the temporal and spatial variability in the thickness between pairs of isothermal surfaces bounding the central temperature of the three main North Atlantic subtropical mode waters shows that large-scale variability in formation occurs over time scales ranging from 5 to 20 yr. The largest formation anomalies are associated with a southward shift in the mixed layer isothermal distribution, possibly due to changes in the gyre dynamics and/or changes in the overlying wind field and air–sea heat fluxes. The persistence of these anomalies is shown to result from their subduction beneath the winter mixed layer base where they recirculate around the subtropical gyre in the background geostrophic flow. Anomalies in the warmest mode (18°C) formed on the western side of the basin persist for up to 5 yr. They are removed by mixing transformation to warmer classes and are returned to the seasonal mixed layer near the Gulf Stream where the stored heat may be released to the atmosphere. Anomalies in the cooler modes (16° and 14°C) formed on the eastern side of the basin persist for up to 10 yr. There is no clear evidence of significant transformation of these cooler mode anomalies to adjacent classes. It has been proposed that the eastern anomalies are removed through a tropical–subtropical water mass exchange mechanism beneath the trade wind belt (south of 20°N). The analysis shows that anomalous mode water formation plays a key role in the long-term storage of heat in the model, and that the release of heat associated with these anomalies suggests a predictable climate feedback mechanism.