Accelerating Arctic permafrost thaw results in increasing methane emissions affecting regional and global climates, but the rate of permafrost disappearance can be difficult to estimate with remote sensing, field surveys and modelling. Here we investigate if the annual growth rings of the shrub Betula nana (dwarf birch) may be used to detect and monitor near-surface permafrost degradation. Whole B. nana samples were collected at Latnjajávri and Corrvosjávri, northernmost Sweden, and their annual growth rings were analysed regarding their potential as permafrost indicators. Permafrost disappeared in Latnjajávri between 1993 and 2001, whereas Corrvosjávri lost its frozen ground decades earlier. Annual growth rings from more than twenty B. nana shrubs at each site were measured and crossdated by serial sectioning, and then averaged into two separate shrub-ring chronologies. Growth rates were higher at Corrvosjávri than at Latnjajávri. Analysing the 1972–2015 period disclosed a stronger climate-growth relationship at Corrvosjávri, with significant correlations with summer temperatures. In Latnjajávri the association with climate was much weaker before the permafrost disappeared, but afterwards reached similar levels as at Corrvosjávri. Our results suggest that changes in the B. nana growth-climate relationship may be used to indicate permafrost degradation. Moreover, the strong correlation between summer temperature and shrub growth after disappearance of permafrost supports previous research that B. nana ring widths are useful climate proxies.