To investigate the relationship between the Indonesian ThroughFlow (ITF) and the Banda Sea circulation, we set up a high‐resolution ocean circulation model for the western Pacific and northern Indian Oceans. This well‐validated model demonstrates complex distributions of the along‐channel velocity in different straits, with vertically sheared flows in the Makassar and Maluku straits but horizontally sheared flows in the Halmahera, Timor, and Ombai straits. The model also reveals a three‐layer circulation pattern in the Banda Sea: clockwise, counterclockwise, and clockwise in the upper (<500 m), middle (500–2,250 m), and lower (>2,250 m) water column, respectively. The Lagrangian tracking code TRACMASS is used to diagnose the sources and sinks of Banda Sea waters. The backward/forward tracking experiment pinpoints the inflows/outflows in the straits surrounding the Indonesian Archipelago (IA), which directly affect the Banda Sea. These TRACMASS results imply active vertical exchanges in the Banda Sea, which result in fast flushing with a typical time scale of 8 years. Based on the profiles of net transport into and out of the Banda Sea estimated from the tracking experiments, the three‐layer circulations of the Banda Sea are dynamically explained in terms of the potential vorticity (PV) integral constraint: the PV flux across the boundary and the wind stress curl act in concert with approximately equal order of magnitude for the clockwise circulation in the upper layer, while the positive (negative) PV flux to the middle (bottom) layer corresponds to the counterclockwise (clockwise) circulation.