Milankovitch proposed that variations in the earth’s orbit cause climate variability through a local thermodynamic response to changes in insolation. This hypothesis is tested by examining variability in an atmospheric general circulation model coupled to an ocean mixed layer model subjected to the orbital forcing of the past 165 000 yr. During Northern Hemisphere summer, the model’s response conforms to Milankovitch’s hypothesis, with high (low) insolation generating warm (cold) temperatures throughout the hemisphere. However, during Northern Hemisphere winter, the climate variations stemming from orbital forcing cannot be solely understood as a local thermodynamic response to radiation anomalies. Instead, orbital forcing perturbs the atmospheric circulation in a pattern bearing a striking resemblance to the northern annular mode, the primary mode of simulated and observed unforced atmospheric variability. The hypothesized reason for this similarity is that the circulation response to orbital forcing reflects the same dynamics generating unforced variability. These circulation anomalies are in turn responsible for significant fluctuations in other climate variables: Most of the simulated orbital signatures in wintertime surface air temperature over midlatitude continents are directly traceable not to local radiative forcing, but to orbital excitation of the northern annular mode. This has paleoclimate implications: during the point of the model integration corresponding to the last interglacial (Eemian) period, the orbital excitation of this mode generates a 1°–2°C warm surface air temperature anomaly over Europe, providing an explanation for the warm anomaly of comparable magnitude implied by the paleoclimate proxy record. The results imply that interpretations of the paleoclimate record must account for changes in surface temperature driven not only by changes in insolation, but also by perturbations in atmospheric dynamics.