The extent and thickness of the Arctic sea ice cover has decreased dramatically in the past few decades with minima in sea ice extent in September 2007 and 2011 and climate models did not predict this decline. One of the processes poorly represented in sea ice models is the formation and evolution of melt ponds. Melt ponds form on Arctic sea ice during the melting season and their presence affects the heat and mass balances of the ice cover, mainly by decreasing the value of the surface albedo by up to 20%. We have developed a melt pond model suitable for forecasting the presence of melt ponds based on sea ice conditions. This model has been incorporated into the Los Alamos CICE sea ice model, the sea ice component of several IPCC climate models. Simulations for the period 1990 to 2007 are in good agreement with observed ice concentration. In comparison to simulations without ponds, the September ice volume is nearly 40% lower. Sensitivity studies within the range of uncertainty reveal that, of the parameters pertinent to the present melt pond parameterization and for our prescribed atmospheric and oceanic forcing, variations of optical properties and the amount of snowfall have the strongest impact on sea ice extent and volume. We conclude that melt ponds will play an increasingly important role in the melting of the Arctic ice cover and their incorporation in the sea ice component of Global Circulation Models is essential for accurate future sea ice forecasts.