The Arctic Ocean plays a key role in the global carbon cycle and budget. This semi-closed ocean and its vast and shallow marginal shelf seas surrounded by widespread tundra makes it a unique area to study the carbon source, sink and budget, with consideration of land-ocean interaction and land and ocean as a whole. Over the last three decades because of global warming, sea ice has rapidly decreased. This has induced air-ice-sea-land multi-geosphere interaction that has greatly affected the carbon source and sink in the arctic areas. Such rapid change has not only led to the release of methane and carbon dioxide in degraded permafrost but has also altered the physical, biological and microbial carbon pumps. This process may be attributed to changes of freshwater input, water mixing and circulation, terrestrial fluvial transport, and nutrient supply to the Arctic Ocean. In this review paper, we discuss how global warming and rapid sea ice retreat affects the Arctic carbon sink and source, with a focus on the biological pump, terrestrial carbon input, and carbon burial in the Arctic Ocean.