Benthic foraminiferal assemblages and geochemical tracers (δ18O, δ13C and 14C) have been analyzed on benthic and planktonic foraminifera from core MD77‐176, located in the northern Bay of Bengal, in order to reconstruct the evolution of intermediate circulation in the northern Indian Ocean since the last glaciation. Results indicate that during the Last Glacial Maximum (LGM), Southern Sourced Water masses were dominant at the core site. A high relative abundance of intermediate and deep infaunal species during the LGM reflects low oxygen concentration and/or mesotropic to eutrophic deep water conditions, associated with depleted benthic δ13C values. During the Holocene, benthic foraminiferal assemblages indicate an oligotropic to mesotrophic environment with well‐ventilated bottom water conditions compared with LGM. Higher values for benthic foraminifera δ13C and B‐P 14C age offsets suggest an increased contribution of North Atlantic Deep Water to the northern Bay of Bengal during the Late Holocene compared to the LGM. Millennial‐scale events punctuated the last deglaciation, with a shift in the δ13C and the ɛNd values coincident with low B‐P 14C age offsets, providing strong evidence for an increased contribution of Antarctic Intermediate Water at the studied site. This was associated with enhanced upwelling in the Southern Ocean, reflecting a strong sea‐atmospheric CO2 exchange through Southern Ocean ventilation during the last deglaciation.