The formation of El Niño is linked with the cycling of a Pacific Ocean circulation pattern known as the El Niño Southern Oscillation or ENSO. In a normal year, low atmospheric pressure develops over northern Australia and Indonesia, with high pressure over the Pacific. Consequently, winds over the Pacific move from east to west. The easterly flow of the trade winds carries warm surface waters westward bringing rainstorms to Indonesia and northern Australia. Along the coast of Peru and Ecuador, cold deep water wells up to the surface to replace the warm water that is pulled to the west.

In an El Niño year, low pressure over northern Australia is replaced by high pressure, whilst air pressure falls over large areas of the central Pacific and along the coast of South America. This change in pressure pattern causes the normal easterly winds to be reduced and sometimes reversed. This allows warm equatorial water to flow or "slop" back eastward across the Pacific, and accumulate along the coastlines of Peru and Ecuador. The warm water off the equatorial South American coast cuts off the upwelling of cold nutrient-rich deep ocean water, drastically reducing fish populations in this part of the Pacific Ocean. The warm moist air on the eastern side of the Pacific leads to drastically increased rates of rainfall and flooding. In contrast, the high pressure and cooler waters around Australasia reduce the formation of storm clouds, leading to drought and sometimes extensive bush fires as the vegetation dries up.

After an El Niño event, weather conditions usually return back to normal. However, in some years the easterly winds can become extremely strong and an abnormal accumulation of cold water can occur in the central and eastern Pacific. This event is called a La El Niña. The cold La Niña events sometimes (but not always) follow El Niño events.