Ground-based observations show that persistent liquid-containing Arctic clouds occur frequently and have a dominant influence on Arctic surface radiative fluxes. Yet, without a hemispheric multi-year perspective, the climate relevance of these intriguing Arctic cloud observations was previously unknown. In this study, Cloud-Aerosol Lidar and Infrared Pathfinder Satellite Observation (CALIPSO) observations are used to document cloud phase over the Arctic basin (60–82°N) during a five-year period (2006–2011). Over Arctic ocean-covered areas, low-level liquid-containing clouds are prevalent in all seasons, especially in Fall. These new CALIPSO observations provide a unique and climate-relevant constraint on Arctic cloud processes. Evaluation of one climate model using a lidar simulator suggests a lack of liquid-containing Arctic clouds contributes to a lack of “radiatively opaque” states. The surface radiation biases found in this one model are found in multiple models, highlighting the need for improved modeling of Arctic cloud phase.