An ocean mixed layer heat budget methodology is used to investigate the physical processes determining subpolar North Atlantic (SPNA) sea surface temperature (SST) and ocean heat content (OHC) variability on decadal to multidecadal time scales using the state-of-the-art climate model HadGEM3-GC2. New elements include development of an equation for evolution of anomalous SST for interannual and longer time scales in a form analogous to that for OHC, parameterization of the diffusive heat flux at the base of the mixed layer, and analysis of a composite Atlantic meridional overturning circulation (AMOC) event. Contributions to OHC and SST variability from two sources are evaluated: 1) net ocean–atmosphere heat flux and 2) all other processes, including advection, diffusion, and entrainment for SST. Anomalies in OHC tendency propagate anticlockwise around the SPNA on multidecadal time scales with a clear relationship to the phase of the AMOC. AMOC anomalies lead SST tendencies, which in turn lead OHC tendencies in both the eastern and western SPNA. OHC and SST variations in the SPNA on decadal time scales are dominated by AMOC variability because it controls variability of advection, which is shown to be the dominant term in the OHC budget. Lags between OHC and SST are traced to differences between the advection term for OHC and the advection–entrainment term for SST. The new results have implications for interpretation of variations in Atlantic heat uptake in the CMIP6 climate model assessment.