Using observationally based hydrographic and eddy diffusivity datasets, a volume budget analysis is performed to identify the main mechanisms governing the spatial and seasonal variability of Antarctic Intermediate Water (AAIW) within the density range γⁿ = (27.25–27.7) kg m⁻³ in the Southern Ocean. The subduction rates and water mass transformation rates by mesoscale and small-scale turbulent mixing are estimated. First, Ekman pumping upwells the dense variety of AAIW into the mixed layer south of the Polar Front, which can be advected northward by Ekman transport into the subduction regions of lighter-variety AAIW and Subantarctic Mode Water (SAMW). The subduction of light AAIW occurs mainly by lateral advection in the southeast Pacific and Drake Passage as well as eddy-induced flow between the Subantarctic and Polar Fronts. The circumpolar-integrated total subduction yields from −5 to 19 Sv (1 Sv ≡ 10⁶ m³ s⁻¹) of AAIW volume loss. Second, the diapycnal transport from subducted SAMW into the AAIW layer is predominantly by mesoscale mixing (2–13 Sv) near the Subantarctic Front and vertical mixing in the South Pacific, while AAIW is further replenished by transformation from Upper Circumpolar Deep Water by vertical mixing (1–10 Sv). Last, 3–14 Sv of AAIW are exported out of the Southern Ocean. Our results suggest that the distribution of AAIW is set by its formation due to subduction and mixing, and its circulation eastward along the ACC and northward into the subtropical gyres. The volume budget analysis reveals strong seasonal variability in the rate of subduction, vertical mixing, and volume transport driving volume change within the AAIW layer. The nonzero volume budget residual suggests that more observations are needed to better constrain the estimate of geostrophic flow and mesoscale and small-scale mixing diffusivities.