The Arctic Oscillation (AO) is a dominant mode of Northern Hemisphere atmospheric variability; however, its teleconnections with the Indian Ocean are not yet fully understood. This study provides a comprehensive assessment of how sea surface temperature (SST) variability across four Indian Ocean subregions—the Arabian Sea (AS), Bay of Bengal (BoB), Tropical Indian Ocean (TIO), and Southern Indian Ocean (SIO)—modulates the AO, using outputs from 35 CMIP6 models and observational datasets (ERA5, NOAA) for 1985–2014. The AO index, constructed via Empirical Orthogonal Function analysis of Northern Hemisphere sea level pressure anomalies, reveals a complex, regionally and seasonally dependent relationship with Indian Ocean SSTs. Notably, the SIO exhibits a robust and significant negative correlation with the AO during boreal winter (DJF; r = −0.53) and on an annual scale, indicating that positive AO phases are associated with cooling in the SIO, likely due to enhanced mid-latitude westerlies that increase ocean mixing and upwelling of cooler subsurface water. In contrast, the AS and BoB show weaker, positive correlations, suggesting that AO-driven atmospheric changes may enhance warm SST anomalies in these northern basins, possibly through alterations in monsoonal wind patterns and ocean–atmosphere heat exchanges. The influence of TIO is minimal, likely due to strong coupling with El Niño-Southern Oscillation (ENSO) and Indian Ocean Dipole (IOD). The CMIP6 multi-model ensemble broadly captures the observed AO-SST teleconnection patterns, but there is considerable inter-model spread, reflecting differences in the representation of atmospheric teleconnections, ocean dynamics, and feedbacks. These findings highlight the critical importance of Indian Ocean SSTs—especially in the SIO—in shaping AO variability, and emphasise the need for improved representation of tropical-extratropical interactions in climate models to enhance the accuracy of seasonal-to-decadal climate predictions and to better anticipate future changes in Northern Hemisphere climate dynamics under ongoing Indian Ocean warming.