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Hurricane Michael formed on October 7, 2018, in the Northwestern Caribbean Sea, and quickly traveled northward through the Gulf of Mexico, making landfall on the Florida panhandle as a devastating Category 5 hurricane only 3 days later. Before landfall, Michael underwent rapid intensification, despite unfavorable atmospheric conditions. Using observations, we characterized the key ocean features encountered by Michael along its track, which are known for favoring hurricane intensification: high sea surface temperatures, upper ocean heat content and low salinity barrier layer conditions. Ocean observations were consistent with suppressed hurricane‐induced upper ocean cooling, which could only be observed by underwater gliders, and showed that Hurricane Michael constantly experienced sea surface temperatures above 28°C. We carried out ocean Observing System Experiments, which demonstrate that the combined assimilation of in situ and satellite ocean observations into a numerical ocean model led to the most realistic representation of the ocean conditions. They also suggest that, when using the Cooper‐Haines (1996) method to assimilate altimetry observations, assimilating temperature observations is necessary to constrain the model upper ocean vertical structure. We also performed coupled hurricane‐ocean simulations to assess the impact of ocean initial conditions on forecasting Michael. These simulations demonstrate that the ocean conditions, in particular the high sea surface temperatures north of 24°N, played a crucial role in the intensification of Michael. Coupled simulations initialized with the most realistic ocean conditions, constrained by field and satellite observations, show a ∼56% error reduction in wind intensity prior to landfall compared to simulations initialized without data assimilation.