A recently assembled South China Sea Physical Oceanographic Dataset provides the first observational evidence for mixed layer salinity changes in the South China Sea from 1960 to 2015. During this period, the mixed layer waters freshened by 0.22 psu. The mixed layer salinity variability is found to be in sync with the Pacific Decadal Oscillation; it freshened in the 1960s, started to salinify in 1974, freshened again from 1993, and then salinified once again from 2012, with linear trends of − 0.019, 0.020, and − 0.024 psu/year, respectively. A box-average salinity budget analysis shows that the surface forcing, horizontal advection, and vertical entrainment terms together can, to a large degree, explain the observed trend in mixed layer salinity. The mixed layer freshening is driven by weakened surface fresh water loss and saline water transport, while salinification is associated with enhanced surface freshwater loss and salt transport through the Luzon Strait. The long-term mixed layer salinity changes affect the stratification, inducing a thinner mixed layer and stronger barrier layer during freshening periods that favor stronger regional ocean–atmosphere interaction.