The accelerated warming of the Arctic climate may alter the local and regional surface energy balances, for which changing land surface temperatures (LSTs) are a key indicator. Modeling current and anticipated changes in the surface energy balance requires an understanding of the spatio-temporal interactions between LSTs and land cover, both of which can be monitored globally by measurements from space. This paper investigates the accuracy of the MODIS LST/Emissivity Daily L3 Global 1 km V005 product and its spatio-temporal sensitivity to land surface properties in a Canadian High Arctic permafrost landscape. The land cover ranged from fully vegetated wet sedge tundra to barren rock. MODIS LSTs were compared with in situ radiometer measurements from wet tundra areas collected over a 2-year period from July 2008 to July 2010 including both summer and winter conditions. The accuracy of the MODIS LSTs was − 1.1 °C with a root mean square error of 3.9 °C over the entire observation period. Agreement was lowest during the freeze-back periods where MODIS LST showed a cold bias likely due to the overrepresentation of clear-sky conditions. A multi-year analysis of LST spatial anomalies, i.e., the difference between MODIS LSTs and the MODIS LST regional mean, revealed a robust spatio-temporal pattern. Highest variability in LST anomalies was found during freeze-up and thaw periods as well as for open water surface in early summer due to the presence or absence of snow or ice. The summer anomaly pattern was similar for all three years despite strong differences in precipitation, air temperature and net radiation. Summer periods with regional mean LSTs above 5.0 °C showed the greatest spatial diversity with four distinct 2.0 °C classes. Summer anomalies ranged from − 4.5 °C to 2.6 °C with an average standard deviation of 1.8 °C. Dry ridge areas heated up the most, while wetland areas and dry areas of sparsely vegetated bedrock with a high albedo remained coolest. The observed summer LST anomalies can be used as a baseline against which to evaluate both past and future changes in land surface properties that relate to the surface energy balance. Summer anomaly classes mainly reflected a combination of albedo and surface wetness. The potential to use this tool to monitor surface drying and wetting in the Arctic should therefore be further explored. A multi-sensor approach combining thermal satellite measurements with optical and radar imagery promises to be an effective tool for a dynamic, process-based ecosystem monitoring scheme.