Interdecadal oscillations are analysed in a coupled ocean—atmosphere model made of a planetary geostrophic ocean model within an idealized geometry, coupled to a zonally-averaged tropospheric atmosphere model. The interdecadal variability that arises spontaneously in this coupled system is caused by intrinsic ocean dynamics, the coupled air-sea feedbacks being not essential. The spatial pattern of the variability bears some resemblance with observations and results obtained with atmosphere-ocean general circulation models (AOGCMs) as well as simpler climate models: large and quasi-stationary upper ocean temperature-dominated density anomalies are found in the north-western part of the ocean basin along with weaker, westward propagating anomalies in the remaining interior. The basic physical mechanism that lies at the heart of the existence of the interdecadal mode is a large-scale baroclinic instability of the oceanic mean flow in the vicinity of the western boundary, characteristic of ocean models forced by constant surface fluxes. Freshwater feedbacks associated with the hydrological cycle are found to have only a modest influence on the interdecadal mode. The presence of a periodic channel mimicking the Antarctic Circumpolar Current at high southern latitudes prevents the oceanic baroclinic instability to occur in the Southern Hemisphere.