Abstract. The main purpose of this study is to quantify the contribution of atmospheric factors to recent off-shore sea-level variability in the Baltic Sea and the North Sea on interannual timescales. For this purpose, we statistically analysed sea-level records from tide gauges and satellite altimetry and several climatic data sets covering the last century. Previous studies had concluded that the North Atlantic Oscillation (NAO) is the main pattern of atmospheric variability affecting sea level in the Baltic Sea and the North Sea in wintertime. However, we identify a different atmospheric circulation pattern that is more closely connected to sea-level variability than the NAO. This circulation pattern displays a link to sea level that remains stable through the 20th century, in contrast to the much more variable link between sea level and the NAO. We denote this atmospheric variability mode as the Baltic Sea and North Sea Oscillation (BANOS) index. The sea-level pressure (SLP) BANOS pattern displays an SLP dipole with centres of action located over (5° W, 45° N) and (20° E, 70° N) and this is distinct from the standard NAO SLP pattern in wintertime. In summertime, the discrepancy between the SLP BANOS and NAO patterns becomes clearer, with centres of action of the former located over (30° E, 45° N) and (20° E, 60° N). This index has a stronger connection to off-shore sea-level variability in the study area than the NAO in wintertime for the period 1993–2013, explaining locally up to 90 % of the interannual sea-level variance in winter and up to 79 % in summer. The eastern part of the Gulf of Finland is the area where the BANOS index is most sensitive to sea level in wintertime, whereas the Gulf of Riga is the most sensitive region in summertime. In the North Sea region, the maximum sea-level sensitivity to the BANOS pattern is located in the German Bight for both winter and summer seasons. We investigated, and when possible quantified, the contribution of several physical mechanisms which may explain the link between the sea-level variability and the atmospheric pattern described by the BANOS index. These mechanisms include the inverse barometer effect (IBE), freshwater balance, net energy surface flux and wind-induced water transport. We found that the most important mechanism is the IBE in both wintertime and summertime. Assuming a complete equilibration of seasonal sea level to the SLP gradients over this region, the IBE can explain up to 88 % of the sea-level variability attributed to the BANOS index in wintertime and 34 % in summertime. The net energy flux at the surface is found to be an important factor for the variation of sea level, explaining 35 % of sea-level variance in wintertime and a very small amount in summer. The freshwater flux could only explain 27 % of the variability in summertime and a negligible part in winter. In contrast to the NAO, the direct wind forcing associated with the SLP BANOS pattern does not lead to transport of water from the North Sea into the Baltic Sea in wintertime.