The evolution of the upper layer circulation in the Indian Ocean is studied with a varying resolution global Miami Isopycnic Coordinate Ocean Model (MICOM). The model solutions are in general agreement with existing descriptions of the Indian Ocean circulation. The seasonal and interannual variability of model fields is analyzed in detail for four important regions of the Indian Ocean, namely the Somali current region, the monsoon currents south of Sri Lanka, the equatorial region, and the Indonesian Through‐flow (ITF) region. In the Somali current region, subsurface processes (100–300 m) are found to play an important role in determining the upper layer characteristics. The strength of the eastward flowing Southwest Monsoon Current (SMC), which transports about 20 × 106 m3 s−1, is closely tied to the local zonal wind stress anomaly. The interannual variability in the semiannual Wyrtki Jets results from the variability in the eastward equatorial winds along the equator. The zonal wind stress components along the equator and the monsoon current regions vary strongly with the El Niño‐Southern Oscillation (ENSO) phenomenon with weaker (stronger) winds during El Niño (La Niña), thus establishing an indirect link between the ENSO and the transport in these regions. The onset of the Equatorial Undercurrent (EUC) also shows significant interannual variability. The EUC appears from February to March every year but in some years it is also observed during late boreal summer. In the ITF region, the transports are generally stronger (weaker) during La Niña (El Niño) events.