Data from the Kuroshio Extension Observatory (KEO) surface mooring are used to analyze the balance of processes affecting the upper ocean heat content and surface mixed layer temperature variations in the Recirculation Gyre (RG) south of the Kuroshio Extension (KE). Cold and dry air blowing across the KE and its warm RG during winter cause very large heat fluxes out of the ocean that result in the erosion of the seasonal thermocline in the RG. Some of this heat is replenished through horizontal heat advection, which may enable the seasonal thermocline to begin restratifying while the net surface heat flux is still acting to cool the upper ocean. Once the surface heat flux begins warming the ocean, restratification occurs rapidly due to the low thermal inertia of the shallow mixed layer depth. Enhanced diffusive mixing below the mixed layer tends to transfer some of the mixed layer heat downward, eroding and potentially modifying sequestered subtropical mode water and even the deeper waters of the main thermocline during winter. Diffusivity at the base of the mixed layer, estimated from the residual of the mixed layer temperature balance, is roughly 3×10?4 m2/s during the summer and up to two orders of magnitude larger during winter. The enhanced diffusivities appear to be due to large inertial shear generated by wind events associated with winter storms and summer tropical cyclones. The diffusivity's seasonality is likely due to seasonal variations in stratification just below the mixed layer depth, which is large during the summer when the seasonal thermocline is fully developed and low during the winter when the mixed layer extends to the top of the thermocline.