The formation of Sub-Antarctic Mode Waters (SAMWs) in the sub-Antarctic Zone of the southern Indo-Pacific Ocean is crucial for the transfer of large amounts of heat and carbon dioxide to the ocean interior, thereby mitigating climate change. Despite their importance, there are contrasting views regarding the origins and history of these water masses prior to subduction, which determine the waters' heat and carbon sequestration capacity. Using a state-of-the-art ocean model constrained by observations, we identify and track the sources of SAMWs and quantify their heat exchange with the atmosphere. Our results confirm the co-existence of two sources of SAMWs: warm, shallow subtropical waters and cold, deep Antarctic waters. The formation of SAMW from contrasting sources has distinct impacts on the climate system. On their path to SAMW formation, subtropical waters release heat into the atmosphere, whilst Antarctic waters absorb heat. Furthermore, subtropical and Antarctic sources dominate SAMW formation in the Indian and Pacific Oceans, respectively, highlighting the contrasting nature of the two main pools of SAMW. Our results shed new light on the intricate nature of SAMWs, helping to predict and understand their role in slowing down future climate change.