Data collected during July and August from the Arctic Ocean Experiment 2001 illustrated a common occurrence of specific-humidity (q) inversions, where moisture increases with height, coinciding with temperature inversions in the central Arctic boundary layer and lower troposphere. Low-level stratiform clouds and their relationship to temperature inversions are examined using radiosonde data and data from a suite of remote sensing instrumentation. Two low-level cloud regimes are identified: the canonical case of stratiform clouds, where the cloud tops are capped by the temperature inversion base (CCI—Clouds Capped by Inversion) and clouds where the cloud tops were found well inside the inversion (CII—Clouds Inside Inversion). The latter case was found to occur more than twice as frequently than the former. The characteristic of the temperature inversion is shown to have an influence on the cloud regime that was supported. Statistical analyses of the cloud regimes using remote sensing instruments suggest that CCI cases tend to be dominated by single-phase liquid cloud droplets; radiative cooling at the cloud top limits the vertical extent of such clouds to the inversion base height. The CII cases, on the other hand, display characteristics that can be divided into two situations—(1) clouds that only slightly penetrate the temperature inversion and exhibit a microphysical signal similar to CCI cases, or (2) clouds that extend higher into the inversion and show evidence of a mixed-phase cloud structure. An important interplay between the mixed-phase structure and an increased potential for turbulent mixing across the inversion base appears to support the lifetime of CII cases existing within the inversion layer.