An adjoint variational assimilation technique is used to assimilate observations of both the oceanic state and wind stress data into an intermediate coupled ENSO prediction model. This method of initialization is contrasted with the more usual method, which uses only wind stress data to establish the initial state of the ocean. It is shown that ocean temperature data has a positive impact on the prediction skill in such models. On the basis of hindcasts for the period 1982–91, it is shown that NIN03 SST anomaly correlations greater than 0.7 can be obtained for hindcasts of duration up to 13 months and greater than 0.6 up to 16 months. There are also clear indications of skill at two years.