This paper presents experimental and theoretical studies of a mode locked free-electron laser (FEL) oscillator. In this experiment the FEL employs a continuous electron beam and it operates in the microwave regime. AM mode-locking is performed by modulating the attenuation of the FEL ring cavity by a PIN diode modulator. The modulation period is tuned to match the RF roundtrip time in the ring cavity. The experimental results show the evolution of a single radiation macropulse. It consists of narrow micropulses in synchronism with the sinusoidal locking signal. The micro-pulse period(-37ns) equals the roundtrip time and the modulation period. The micro-pulse width (-5 ns) is limited by the FEL slippage time and by the dispersion in the waveguide ring cavity. The effect of the mode locking to suppress asynchronous oscillations is clearly observed in the experiment. A theoretical model of the AM mode locked FEL oscillator operating in the small signal regime is presented. This model includes the slow time variation of the e-beam energy and waveguide dispersion. The theoretical analysis agrees well with the experimental results.