El Niño–Southern Oscillation (ENSO) is an important driver of climate and carbon cycle variability in the Amazon. Sea surface temperature (SST) anomalies in the equatorial Pacific drive teleconnections with temperature directly through changes in atmospheric circulation. These circulation changes also impact precipitation and, consequently, soil moisture, enabling additional indirect effects on temperature through land–atmosphere coupling. To separate the direct influence of ENSO SST anomalies from the indirect effects of soil moisture, a mechanism-denial experiment was performed to decouple their variability in the Energy Exascale Earth System Model (E3SM) forced with observed SSTs from 1982 to 2016. Soil moisture variability was found to amplify and extend the effects of SST forcing on eastern Amazon temperature and carbon fluxes in E3SM. During the wet season, the direct, circulation-driven effect of ENSO SST anomalies dominated temperature and carbon cycle variability throughout the Amazon. During the following dry season, after ENSO SST anomalies had dissipated, soil moisture variability became the dominant driver in the east, explaining 67%–82% of the temperature difference between El Niño and La Niña years, and 85%–91% of the difference in carbon fluxes. These results highlight the need to consider the interdependence between temperature and hydrology when attributing the relative contributions of these factors to interannual variability in the terrestrial carbon cycle. Specifically, when offline models are forced with observations or reanalysis, the contribution of temperature may be overestimated when its own variability is modulated by hydrology via land–atmosphere coupling.