Hydroid diversity and species composition were studied in Arctic coastal waters around the Norwegian Svalbard Archipelago. The aim of the present study was to examine the influence of physical factors (depth and substrate type) on the distribution and diversity of the benthic hydrozoan fauna that has been poorly studied in the high-latitude polar region. The study is based on a total of 557 samples collected between 1996 and 2007. Over 1200 colonies and 70 taxa of Hydrozoa were collected by SCUBA divers, dredges and van Veen grabs. The distribution patterns with respect to major environmental factors were studied based on presence/absence data. Four substrate types were most commonly colonized by hydroid colonies: algae, bryozoans, rocks and hydrozoans. The highest species richness was noted on algae and rocks. Shallow water communities of the study area were characterized by a high hydroid species richness. A number of species decrease along the depth gradient. Some species have shown some preferences towards selected substrates or one of the two depth zones, but most hydroid species were generalists in terms of both the depth and substrate preferences. No species could be classified as substrate-specific (i.e. occurring only on one substrate type). The substrate heterogeneity was shown to be an important driver of hydroid species richness in Arctic coastal waters.