Insulation provided by snow cover and tolerance of freezing by physiological acclimation allows Arctic plants to survive cold winter temperatures. However, both the protection mechanisms may be lost with winter climate change, especially during extreme winter warming events where loss of snow cover from snow melt results in exposure of plants to warm temperatures and then returning extreme cold in the absence of insulating snow. These events cause considerable damage to Arctic plants, but physiological responses behind such damage remain unknown. Here, we report simulations of extreme winter warming events using infrared heating lamps and soil warming cables in a sub-Arctic heathland. During these events, we measured maximum quantum yield of photosystem II (PSII), photosynthesis, respiration, bud swelling and associated bud carbohydrate changes and lipid peroxidation to identify physiological responses during and after the winter warming events in three dwarf shrub species: Empetrum hermaphroditum, Vaccinium vitis-idaea and Vaccinium myrtillus. Winter warming increased maximum quantum yield of PSII, and photosynthesis was initiated for E. hermaphroditum and V. vitis-idaea. Bud swelling, bud carbohydrate decreases and lipid peroxidation were largest for E. hermaphroditum, whereas V. myrtillus and V. vitis-idaea showed no or less strong responses. Increased physiological activity and bud swelling suggest that sub-Arctic plants can initiate spring-like development in response to a short winter warming event. Lipid peroxidation suggests that plants experience increased winter stress. The observed differences between species in physiological responses are broadly consistent with interspecific differences in damage seen in previous studies, with E. hermaphroditum and V. myrtillus tending to be most sensitive. This suggests that initiation of spring-like development may be a major driver in the damage caused by winter warming events that are predicted to become more frequent in some regions of the Arctic and that may ultimately drive plant community shifts.