Decadal climate variability of sea surface temperature (SST) over the Pacific Ocean can be characterized by Interdecadal Pacific Oscillation (IPO) or Pacific Decadal Oscillation (PDO) based on Empirical Orthogonal Function (EOF) analysis. Although the procedures to derive the IPO and PDO indices differ in their regional focuses and filtering methods to remove interannual variability, IPO and PDO are highly correlated in time and are often used interchangeably. Studies have shown that the IPO/PDO play a vital role in modulating the pace of global warming. It is less clear, however, how externally-forced global warming may, in turn, affect IPO/PDO. One obstacle to revealing this effect is that the conventional definitions of IPO/PDO fail to account for the spatial heterogeneity of background warming trend, which causes IPO/PDO to be conflated with the warming trend, especially for the 21st-century simulation when the forced change is likely to be more dominant. Using a large-ensemble simulation in Community Earth System Model version 1 (CESM1), we show here that a better practice of detrending prior to EOF analysis is to remove the “local and non-linear” trend, defined as the ensemble mean time series at each grid box (or simply as the quadratic fit of the local time series if such an ensemble is not available). The revised IPO/PDO index is purely indicative of internal decadal variability. In the 21st century warmer climate, IPO/PDO has a weaker amplitude in space, a higher frequency in time, and a muted impact on global and North American temperature and rainfall.