Detailed physical and chemical observations were obtained during September 1997 of a cold core eddy situated in the southern central Canada Basin of the Arctic Ocean. The eddy was about 20 km in diameter, had maximum current speeds exceeding 20 cm s−1, and extended from the base of the upper mixed layer, near 40 m, down to ∼400 m. Excess salt in the eddy core was consistent with addition of brine from ∼1 m of ice formation. Core tracer distributions indicated a lifetime exceeding 1 year and were consistent with an origin as near-surface Pacific water with some admixed terrestrial runoff. The eddy was probably formed in association with a polynya along the Alaskan Chukchi Sea coast through local water densification from surface ice formation followed by development of frontal instabilities. Formation and subsequent migration of such eddies, which may have lifetimes of several years, provide a mechanism for transporting water from the Beaufort and Chukchi Sea coastal and shelf regions into the interior Canada Basin and for contributing to maintenance of the permanent halocline. Present light ice conditions throughout the Arctic Ocean favor the formation of such eddies and may contribute to enhanced ventilation of the halocline waters.