Monthly‐mean fluxes computed from the Comprehensive Ocean‐Atmosphere Data Set (COADS) are used to describe the variability in air‐sea heat exchange over the eastern Newfoundland Shelf and examine its role in ocean temperature variability. Attention is focussed on the climatological annual variation and interannual (monthly) anomalies of fluxes and ocean temperature during 1951–1988 in two areas: Station 27 on the inner shelf and the central Grand Bank. A vertical diffusion model is used to quantify the contribution of the fluxes to ocean temperature variability, and examine the temporal and vertical structure of the vertical eddy diffusivity. For the climatological annual temperature variation, the model indicates that local air‐sea fluxes can account for 89% and 77% of the variance for Sta. 27 and the central Grand Bank, respectively, although there are also influences from ocean advection. Strong seasonal and vertical variations in the diffusivity are suggested by the model, with values generally in the range (0.5 — 20) × 10‐4m s‐1. For interannual ocean temperature variability, the model and flux estimates indicate that local air‐sea fluxes can account for only a small fraction of the observed variability, although there is a strong suggestion of coupled atmosphere‐ocean temperature variability, particularly at low frequencies. Ocean advection, sea ice influences and flux inaccuracies are discussed as possible factors in the interannual variability results. Collectively, the study results indicate that ocean temperature variability on the eastern Newfoundland Shelf is part of an atmosphere‐ice‐ocean interconnection involving both regional and large‐scale processes.