Ignoring small-scale heterogeneities in Arctic land cover may bias estimates of water, heat and carbon fluxes in large-scale climate and ecosystem models. We investigated subpixel-scale heterogeneity in CHRIS/PROBA and Landsat-7 ETM+ satellite imagery over ice-wedge polygonal tundra in the Lena Delta of Siberia, and the associated implications for evapotranspiration (ET) estimation. Field measurements were combined with aerial and satellite data to link fine-scale (0.3m resolution) with coarse-scale (upto 30m resolution) land cover data. A large portion of the total wet tundra (80%) and water body area (30%) appeared in the form of patches less than 0.1 ha in size, which could not be resolved with satellite data. Wet tundra and small water bodies represented about half of the total ET in summer. Their contribution was reduced to 20% in fall, during which ET rates from dry tundra were highest instead. Inclusion of subpixel-scale water bodies increased the total water surface area of the Lena Delta from 13% to 20%. The actual land/water proportions within each composite satellite pixel was best captured with Landsat data using a statistical downscaling approach, which is recommended for reliable large-scale modelling of water, heat and carbon exchange from permafrost landscapes.