The basal mass loss of the Antarctic Ice Sheet (AIS) is one of the major sources of uncertainty in projections of global sea level rise. The uncertainty in part stems from the poorly understood two-way feedback between the ice sheet and the climate system: neither the response of the Antarctic ice shelves to a warming climate, nor the feedback of the Antarctic ice shelf meltwater onto climate, is well constrained. Yet this feedback remains underrepresented, or entirely absent in previous generations of Earth system models (ESMs), which employ static ice shelves or closed ice shelf cavities. Here, we use a state-of-the-art ice sheet-climate coupled model, UKESM1.2, to investigate the two-way feedback between AIS and climate. Three idealized experiments under +8 GtC/yr emissions are presented: one with an interactive AIS, one with a static AIS, and one with a static AIS and prescribed basal mass loss. Omitting the interactive AIS produces a 40% bias in AIS basal mass loss, because the negative feedback between ice shelf melt and cavity circulation cannot be captured in the static AIS simulation. This in turn biases the climate simulations at both global and regional scales. Globally, either the absence of response of AIS ice shelf freshwater flux (FWF) to a warming climate or the omission of interactive AIS geometry leads to a warmer and saltier global ocean, owing to the reduced FWF entering the ocean and the consequent reduction in latent heat consumed by the ice shelves. Regionally, the omission of interactive AIS geometry yields a different response: the interactive AIS produces a warmer but, counterintuitively, fresher Southern Ocean shelf sea, despite releasing less FWF there. Our results highlight the need to include interactive ice sheets in the ESMs to reduce biases in sea level rise and climate projections.