Cloud and thermodynamic characteristics from three Arctic observation sites are investigated to understand the collocation between low-level clouds and temperature inversions. A regime where cloud top was 100-200 m above the inversion base [cloud inside inversion (CII)] was frequently observed at central Arctic Ocean sites, while observations from Barrow, Alaska, indicate that cloud tops were more frequently constrained to inversion base height [cloud capped by inversion (CCI)]. Cloud base and top heights were lower, and temperature inversions were also stronger and deeper, during CII cases. Both cloud regimes were often decoupled from the surface except for CCI over Barrow. In-cloud lapse rates differ and suggest increased cloud-mixing potential for CII cases. Specific humidity inversions were collocated with temperature inversions for more than 60% of the CCI and more than 85% of the CII regimes. Horizontal advection of heat and moisture is hypothesized as an important process controlling thermodynamic structure and efficiency of cloud-generated motions. The portion of CII clouds above the inversion contains cloud radar signatures consistent with cloud droplets. The authors test the longwave radiative impact of cloud liquid above the inversion through hypothetical liquid water distributions. Optically thin CII clouds alter the effective cloud emission temperature and can lead to an increase in surface flux on the order of 1.5 W m(-2) relative to the same cloud but whose top does not extend above the inversion base. The top of atmosphere impact is even larger, increasing outgoing longwave radiation up to 10 W m(-2). These results suggest a potentially significant longwave radiative forcing via simple liquid redistributions for a distinctly dominant cloud regime over sea ice.