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The Gulf of Maine's lunar semidiurnal (M2) ocean tide exhibits spatially coherent amplitude changes of ∼1–3 cm on interannual time scales, though no causative mechanism has been identified. Here we show, using a specially designed numerical modeling framework, that stratification changes account for 32%–48% (Pearson coefficient 0.58–0.69) of the observed M2 variability at tide gauges from 1994 to 2019. Masking experiments and energy diagnoses reveal that the modeled variability is primarily driven by fluctuations in barotropic‐to‐baroclinic energy conversion on the continental slope south of the gulf's mouth, with a 1‐cm amplitude increase at Boston corresponding to a ∼7% (0.30 GW) drop in the area‐integrated conversion rate. Evidence is given for the same process to have caused the decade‐long M2 amplitude decrease in the Gulf of Maine beginning in 1980/81. The study has implications for nuisance flooding predictions and space geodetic analyses seeking highest accuracies. Plain Language Summary: The height of the twice‐daily tide at Boston is about 135 cm, but researchers have long noted that this value fluctuates by about 1–3 cm from year to year. Here we show that the annual tidal height changes—seen in fact throughout the Gulf of Maine—are closely linked to how seawater density is distributed three‐dimensionally in the region. In particular, as tidal currents enter the gulf over steep underwater topography, the vertical distribution of density determines how much of the incoming wave energy is scattered back as internal tides into the deeper Northwest Atlantic. In years where this conversion of wave energy drops by 7% from its nominal value of 4 Gigawatt, the surface tide at Boston typically increases by 1 cm. Climate‐induced changes in ocean temperature and density may strengthen or weaken the conversion effect and thus slightly alter the role of tides in coastal flood events. Key Points: We propagate the M2 tide through realistic, annually varying density structures (1993–2019) in a regional Gulf of Maine modelStratification changes explain 32%–48% of the observed, cm‐level M2 amplitude variability at coastal tide gauges from 1994 to 2019Modeled M2 changes mainly reflect fluctuations in the barotropic‐baroclinic energy conversion rate on the New England continental slope [ABSTRACT FROM AUTHOR]