Nitrous oxide (N2O) contributes ∼6% of the total radiative forcing from long-lived greenhouse gases. While tropospheric concentrations have increased by 20% since the beginning of the industrial revolution, sources and sinks of N2O are still poorly quantified. In the Arctic, N2O atmospheric concentrations vary seasonally, due mainly to vertical mixing. The contributions of local natural sources to this cycle are still unknown. Here we report on N2O measurements conducted in the bottom 10 cm of the sea ice and in the underlying surface water (USW) from late March to early May 2008 in the southeastern Beaufort Sea and Amundsen Gulf. Bulk N2O concentrations in ice were low (∼6 nM) and were consistently undersaturated with respect to the USW (∼40% saturation) and the atmosphere (∼30% saturation). Loss of N2O via brine rejection during sea ice formation in fall and winter can explain these low N2O ice concentrations. An unknown fraction of this rejected N2O is likely ventilated to the atmosphere either directly from the ice or through leads during ice formation, while in spring and early summer, melting of the N2O-depleted sea ice is expected to lower the partial pressure of N2O of newly open waters which could act as a sink for atmospheric N2O. These first measurements indicate that sea ice formation and melt has the potential to generate sea-air or air-sea fluxes of N2O, respectively.