Genetic variation at molecular loci may underlie important variation in the phenotypes of arctic plants. Such intraspecific variation may be a neglected but important component of biological diversity in the Arctic that could impact how arctic ecosystems respond to climate change. Here, we characterized genetic and phenotypic variation in Salix arctica and evaluated the effect of S. arctica on ecosystem CO2 exchange, a process by which terrestrial ecosystems in the Arctic feedback to the global climate system. We found high genetic variation at microsatellite loci of S. arctica collected from an inland and a coastal site in Greenland that indicates sexual reproduction has occurred frequently as the ice sheet has retreated. Across the North American range of S. arctica, ten chloroplast DNA haplotypes were identified. Haplotype diversity and allelic richness were high overall and similar across regions with different glacial histories. Phenotypic variation in ecologically important traits varied substantially in a High Arctic population of S. arctica. In a widespread High Arctic ecosystem, a net loss of CO2 to the atmosphere was observed except where S. arctica was present. We suggest that high genetic variation in S. arctica is in part a result of frequent sexual reproduction, and that the phenotypic variation we observed is likely to be at least partially genetic-based. This would enable a productive High Arctic species to adapt and potentially prosper as climate changes, and thus affect the terrestrial feedback of the Arctic to the climate system.