The present study examines the relationship between the tropical Indian Ocean (TIO) significant wave height (SWH) and Indian Ocean dipole (IOD) during boreal summer season (June through August) in the latest version of European Centre for Medium‐Range Weather Forecasts reanalysis (ERA5) and wave simulations forced with surface winds and sea‐ice fields from the Coupled Model Intercomparison Project version‐5 (CMIP5) models. The interannual variability of SWH shows a significant negative correlation with the IOD over TIO. SWH anomalies display meridional tripole pattern with significant negative (positive) anomalies over eastern equatorial Indian Ocean caused by anomalous easterlies (westerlies), and positive (negative) anomalies over southeastern TIO and the north Bay of Bengal during positive (negative) phase of IOD. The strong wave heights along the east coast of India during positive IOD and the south and southwest coast of India during negative IOD are noticed. CMIP5 models GFDL‐CM3, MRI‐CGCM3 and the multi‐model mean display considerable skill in capturing these teleconnections with substantial magnitude differences. A thorough understanding of the teleconnections between IOD and TIO wave heights is a significant prerequisite for the accurate forecast of surface waves in the Indian Ocean. Hence, this study advocates the importance evaluating the ability of models in representing the SWH and IOD interactions and its implications on Indian coastal regions in the form of inundation, coastal flooding and other vulnerabilities in a changing climate scenario.