Ice-rich permafrost landscapes are sensitive to climate and environmental change due to the melt-out of ground ice during thermokarst development. Thermokarst processes in the northern Yukon Territory are currently not well-documented. Lake sediments from Herschel Island (69°36′N; 139°04′W) in the western Canadian Arctic provide a record of thermokarst lake development since the early Holocene. A 727 cm long lake sediment core was analyzed for radiographic images, magnetic susceptibility, granulometry, and biogeochemical parameters (organic carbon, nitrogen, and stable carbon isotopes). Based on eight calibrated AMS radiocarbon dates, the sediment record covers the last ~11,500 years and was divided into four lithostratigraphic units (A to D) reflecting different thermokarst stages. Thermokarst initiation at the study area began ~11.5 cal ka BP. From ~11.5 to 10.0 cal ka BP, lake sediments of unit A started to accumulate in an initial lake basin created by melt-out of massive ground ice and thaw subsidence. Between 10.0 and 7.0 cal ka BP (unit B) the lake basin expanded in size and depth, attributed to talik formation during the Holocene thermal maximum. Higher-than-modern summer air temperatures led to increased lake productivity and widespread terrain disturbances in the lake's catchment. Thermokarst lake development between 7.0 and 1.8 cal ka BP (unit C) was characterized by a dynamic equilibrium, where lake basin and talik steadily expanded into ambient ice-rich terrain through shoreline erosion. Once lakes become deeper than the maximum winter lake ice thickness, thermokarst lake sediments show a great preservation potential. However, site-specific geomorphic factors such as episodic bank-shore erosion or sudden drainage through thermo-erosional valleys or coastal erosion breaching lake basins can disrupt continuous deposition. A hiatus in the record from 1.8 to 0.9 cal ka BP in Lake Herschel likely resulted from lake drainage or allochthonous slumping due to collapsing shore lines before continuous sedimentation of unit D recommenced during the last 900 years.