Using observation/reanalysis data, influences of the Interdecadal Pacific Oscillation (IPO) on the frequency of the locally amplified Ningaloo Niño (i.e., events with local air‐sea interactions playing an important role) and their mechanisms are investigated in this study. It is found that the ratio of the locally amplified Ningaloo Niño increases during the negative phase of the IPO. This is due to positive interdecadal sea surface temperature anomalies to the northwest of Australia that promote deep atmospheric convection and anomalous cyclone off the west coast of Australia through a Matsuno‐Gill response. Based on a mixed layer heat budget analysis using outputs from a regional ocean model, it is shown that an enhanced warming of anomalously thin mixed layer by the shortwave radiation contributes dominantly to the interdecadal sea surface temperature anomalies. The shallow mixed layer depth is suggested to be generated by anomalously weak winds associated with the negative IPO.