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Observations have indicated a trend of freshwater loss in the global western boundary current extension regions over several recent decades. In this paper, the coupled ocean--atmosphere response to the observed freshwater flux trend [[defined as evaporation minus precipitation (EmP)]] over the Kuroshio--Oyashio Extension (KOE) region is studied in a series of coupled model experiments. The model explicitly demonstrates that the positive EmP forcing in the KOE region can set up a cyclonic gyre straddling the subtropical and the subpolar gyre, which induces anomalous southward cold advection in the west and northward warm advection in the interior. This leads to the formation of a temperature dipole in the midlatitudes with a cooling in the west and a warming in the east. With the positive EmP forcing in the KOE, the response of the extratropical atmospheric circulation in the North Pacific sector is characterized by an equivalent barotropic low originating primarily from the western tropical Pacific changes and countered by the extratropical SST forcing. The positive EmP forcing also strengthens the tropical zonal SST gradient and thus ENSO through several competing processes including the surface-coupled wind--evaporative--SST (WES) mechanism, subduction of extratropical warm anomalies, and spinup of the density-driven meridional overturning circulation. Applications to recent Pacific climate changes are discussed. [ABSTRACT FROM AUTHOR]