Tropical cyclone potential intensity (Vp) is controlled by thermodynamic air‐sea disequilibrium and thermodynamic efficiency, which is a function of the sea surface temperature and the tropical cyclone's outflow temperature. Observed trends and variability in Vp in each ocean basin are decomposed into contributions from these two components. Robustly detectable trends are found only in the North Atlantic, where tropical tropopause layer (TTL) cooling contributes up to a third of the increase in Vp. The contribution from disequilibrium dominates the few statistically significant Vp trends in the other basins. The results are sensitive to the data set used and details of the Vp calculation, reflecting uncertainties in TTL temperature trends and the difficulty of estimating Vp and its components. We also find that 20–71% of the interannual variability in Vp is linked to the TTL, with correlations between detrended time series of thermodynamic efficiency and Vp occurring over all ocean basins. Key Points Contributions to tropical cyclone potential intensity trends are quantified Robust trends only in Atlantic, disagreement between data sources elsewhere TTL temperatures play a role in interannual variability of potential intensity