It has long been accepted that interannual fluctuations in sea surface temperature (SST) in the Atlantic are associated with fluctuations in seasonal Atlantic basin tropical cyclone frequency. To isolate the physical mechanism responsible for this relationship, a singular value decomposition (SVD) is used to establish the dominant covarying modes of tropospheric wind shear and SST as well as horizontal SST gradients. The dominant SVD mode of covarying vertical shear and SST gradients, which comprises equatorially confined near-zonal vertical wind shear fluctuations across the Atlantic basin, is highly correlated with both equatorial eastern Pacific SST anomalies (associated with El Niño) and West African Sahel rainfall. While this mode is strongly related to tropical storm, hurricanes, and major hurricane frequency in the Atlantic, it is not associated with any appreciable Atlantic SST signal.By contrast, the second SVD mode of covarying vertical shear and horizontal SST gradient variability, which is effectively uncorrelated with the dominant mode, is associated with SST fluctuations concentrated in the main tropical cyclone development region between 10° and 20°N. This mode is significantly correlated with tropical storm and hurricane frequency but not with major hurricane frequency. Statistical tests confirm the robustness of the mode, and lag correlations and physical reasoning demonstrate that the SST anomalies are not due to the developing tropical cyclones themselves. Anomalies of SST and vertical shear during years where the mode has substantial amplitude confirm the resemblance of the individual fields to the modal structure, as well as the association of hurricane development with the warmer SSTs. Although SSTs are of secondary importance to vertical shear in modulating hurricane formation, explaining only 10% of the interannual variability in hurricane frequency over the 50% explained by vertical shear, the results support the conclusion that warmer SSTs directly enhance development. The lack of correlation with major hurricanes implies that the underlying SSTs are not a significant factor in the development of these stronger systems.