Data obtained during the last 20 years from selected hydrographic stations throughout the Arctic Ocean basins and at the continental slopes and northern parts of the surrounding shelf seas are examined to estimate the contribution of Atlantic water to the upper part of the Arctic Ocean water column, and to follow the circulation of the Atlantic derived halocline waters around the Arctic Ocean basins. A substantial fraction of the Atlantic water entering the Arctic Ocean in the two inflow branches, the Fram Strait branch and the Barents Sea branch, is transformed into less dense waters. The inflow through Fram Strait encounters and melts sea ice. Its upper part becomes less saline, and in winter, ice formation homogenizes this low salinity upper part into a winter mixed layer, which follows the boundary flow eastward. The inflow over the Barents Sea mainly becomes colder, less saline and denser due to cooling and net precipitation, but melting of sea ice also here creates a less dense upper layer, which is subsequently homogenized by haline convection. Both these components enter the Nansen Basin via the St. Anna Trough and flow eastward along the Siberian continental slope. A third component of the Barents Sea inflow, mainly comprising Norwegian Coastal Current water, remains on the shelf, where it absorbs the runoff from the large Siberian rivers and evolves into low salinity shelf water. This part continues as far east as the Laptev Sea before a major inflow to the deep Arctic Ocean basins occurs. Winter convection, which in most of the Nansen Basin extends to the Atlantic layer, then becomes limited to the injected low salinity shelf water, and the more saline upper layers of the Fram Strait and the Barents Sea branches are transformed into halocline waters. The Fram Strait branch supplies the halocline water of the Amundsen, Makarov and part of the Canada basins, while the upper part of the Barents Sea branch, initially confined to the Siberian continental slope, becomes the main source of the lower halocline below the Pacific water in the Canada Basin beyond the Chukchi Cap. Less dense Pacific water close to the North American continent prevents the Atlantic derived upper layers from flowing through the Canadian Arctic Archipelago and their main exit is Fram Strait. Only some of the Barents Sea branch halocline water passes through Nares Strait and may occasionally renew the deep and bottom waters of Baffin Bay.