Energy circulation in geospace lies at the heart of space weather research. In the inner magnetosphere, the steep plasmapause boundary separates the cold dense plasmasphere, which corotates with the planet, from the hot ring current/plasma sheet outside. Theoretical studies suggested that plasmapause surface waves related to the sharp inhomogeneity exist and act as a source of geomagnetic pulsations, but direct evidence of the waves and their role in magnetospheric dynamics have not yet been detected. Here, we show direct observations of a plasmapause surface wave and its impacts during a geomagnetic storm using multi-satellite and ground-based measurements. The wave oscillates the plasmapause in the afternoon-dusk sector, triggers sawtooth auroral displays, and drives outward-propagating ultra-low frequency waves. We also show that the surface-wave-driven sawtooth auroras occurred in more than 90% of geomagnetic storms during 2014-2018, indicating that they are a systematic and crucial process in driving space energy dissipation.