Deepwater formation, the process whereby surface water is actively converted to deep water through heat and freshwater exchange at the air-sea interface, is known to occur in the North Atlantic but not to occur in the North Pacific. As such, the thermohaline circulation is fundamentally different in these two regions. In this review we provide a description of this circulation and ouline a number of reasons as to why the North Atlantic forms deepwater but not the North Pacific. Special emphasis is given to the role of interactions with the Arctic Ocean. We extend our analysis to discuss observational evidence and current theories for decadal-interdecadal climate variability in each region, with particular focus on the role of the ocean. Differences between the North Atlantic and North Pacific are once more highlighted.