Sea level observed by altimeter during the 1993–2004 period, thermosteric sea level from 1945 through 2004, and tide gauge records are analyzed to investigate the interannual variability of sea level in the South China Sea (SCS) and its relationship with ENSO (El Niño and Southern Oscillation). Both the interannual variations of the observed sea level and the thermosteric sea level are closely related to ENSO. An ‘enigma’ that the SST and sea level in the SCS have inverse response to ENSO is revealed. It is found that the thermosteric sea level has an excellent correspondence to seawater temperature at 100 m depth, and their variations are unsynchronized to SST. Detailed analysis denotes that the warming of seawater occurs only in the upper 75 m during and after the mature phase of El Niño, while the cooling appears in the layers deeper than 75 m during El Niño years. The volume transports between the SCS and the adjacent oceans and the anomalous Ekman pumping contribute a lot for the sea level fall in the developing stage of El Niño, while the mass exchange, which is dominated by precipitation, plays a more significant role in the following continuous negative sea level anomalies.