Observations and measurements were made of physical and ecological changes that have occurred since 1985 at a tundra site near Healy, Alaska. Air temperatures decreased (1985 through 1999) while permafrost warmed and thawed creating thermokarst terrain, probably as a result of increased snow depths. Permafrost, active layer and ground-ice conditions at the Healy site are the result of the interaction of climatic, ecologic and other factors. The slow accumulation of ground ice in an intermediate permafrost layer formed by upward freezing from the permafrost surface leads to long-term differential frost heave and microrelief. When ground ice in the permafrost melts, the ground surface settles differentially resulting in thermokarst terrain (pits, gullies). Windblown snow fills the thermokarst depressions causing further warming and thawing of the underlying permafrost — a positive feedback effect that enhances permafrost degradation. Thermokarst-induced changes in relief alter the near-surface hydrology and ecological processes. Changes in vegetation included differential tussock growth and mortality and a shift in moss species abundance and relative productivity, depending on microtopographic position created by the thermokarst terrain. Water redistribution towards thermokarst depressions caused adjacent higher areas to become drier and resulted in increased moss mortality and shrub abundance. Copyright © 2009 John Wiley & Sons, Ltd.