Using an ocean model, generation and decay mechanisms of warm/cool sea surface temperature anomalies (SSTAs) off Western Australia, or Ningaloo Niño/Niña, are investigated through the calculation of a mixed‐layer temperature (MLT) balance taking the mixed‐layer depth (MLD) variation into account. Since Ningaloo Niño/Niña develops owing to local air‐sea interaction and/or remote forcing, events are classified into two cases based on alongshore wind anomalies and analyzed separately. It is revealed that the anomalous meridional advection associated with the stronger Leeuwin Current and the enhanced warming by the climatological shortwave radiation because of the shallower MLD generate warm SSTAs in the coastal region for both cases of Ningaloo Niño. On the other hand, the latent heat flux damps SSTAs only in a case without northerly alongshore wind anomalies. In the decay, larger sensible heat loss is important. Because of the reduced meridional temperature gradient, the meridional advection eventually damps SSTAs. The sensitivity change to the climatological shortwave radiation owing to MLD anomalies explains offshore MLT tendency anomalies for both cases throughout the events. The mechanisms for Ningaloo Niña are close to a mirror image of Ningaloo Niño but differ in that the latent heat flux damps offshore SSTAs. The seasonal phase‐locking nature of Ningaloo Niño/Niña is related to the seasonal variations of MLD and surface heat fluxes, which regulate the amplitude and sign of the sensitivity change to surface heat fluxes. It is also related to the seasonal variations of the Leeuwin Current and meridional temperature gradient through advection anomalies.