Hydrographic data from the first phase of the Coordinated Eastern Arctic Experiment (CEAREX) are analyzed. The data consist of temperature and salinity measurements made by a ship-based conductivity-temperature-depth (CTD) instrument and by a drifting SALARGOS buoy. These data were collected in the autumn and early winter of 1988–1989 in the northern Barents Sea, mostly in ice-covered conditions and then across the marginal ice zone (MIZ). The data show that relatively warm, salty water of Atlantic origin is modified by air cooling and ice melting to produce lighter water that has properties identical to (lower) halocline water found in the Arctic Ocean. This occurs mostly at the MIZ and to a lesser degree within the ice pack itself. At the MIZ the halocline water subducts underneath the lighter meltwater that resides directly under the ice pack; geostrophic velocity calculations indicate that it then turns eastward and flows toward the Kara Sea, in keeping with previous chemical tracer analyses. A rough calculation reveals that the amount of halocline water formed in this way in the Barents Sea and Fram Strait is 30–50% of that formed by ice growth in eastern Arctic polynyas.