We assess the impact of satellite sea surface salinity (SSS) observations on seasonal to interannual variability of tropical Indo-Pacific Ocean dynamics as well as on dynamical ENSO forecasts. Our coupled model is composed of a primitive equation ocean model for the tropical Indo-Pacific region that is coupled with the global SPEEDY atmospheric model (Molteni, 2003). The Ensemble Reduced Order Kalman Filter is used to assimilate observations to constrain dynamics and thermodynamics for initialization of the coupled model. The baseline experiment assimilates satellite sea level, SST, and in situ subsurface temperature and salinity observations. This baseline is then compared with experiments that additionally assimilate Aquarius (version 4.0) and SMAP (version 2.0) SSS. Twelve-month forecasts are initialized for each month from Sep. 2011 to Dec. 2016. We find that including satellite SSS significantly improves NINO 3.4 sea surface temperature anomaly validation after 1 out to 12 month forecast lead times. For initialization of the coupled forecast, the positive impact of SSS assimilation is brought about by surface freshening near the eastern edge of the western Pacific warm pool and density changes that lead to shallower mixed layer between 10 degrees South latitude-5 degrees North latitude. SST differences at initialization force wide-spread downwelling favorable curl over most of the tropical Pacific. Over an average forecast, SST remains warmer with SSS assimilation at the eastern edge of the warm pool. This warm SST propagates into the eastern Pacific and drags westerly wind anomalies eastward into the NINO 3.4 region. In addition, salting near the ITCZ (Intertropical Convergence Zone) leads to a deepening of the mixed layer and thermocline near 8 degrees North latitude. These patterns together lead to a funneling effect that provides the background state to amplify equatorial Kelvin waves. We show that the downwelling Kelvin waves are amplified by assimilating satellite SSS and lead to significantly improved forecasts particularly for the 2015 El Nino.