Role of changing climatic conditions on permafrost degradation and hydrology was investigated in the transition zone between the tundra and forest ecotones at the boundary of continuous and discontinuous permafrost of the lower Yenisei River. Three watersheds of various sizes were chosen to represent the characteristics of the regional landscape conditions. Samples of river flow, precipitation, snow cover, and permafrost ground ice were collected over the watersheds to determine isotopic composition of potential sources of water in a river flow over a two year period. Increases in air temperature over the last forty years have resulted in permafrost degradation and a decrease in the seasonal frost which is evident from soil temperature measurements, permafrost and active-layer monitoring, and analysis of satellite imagery. The lowering of the permafrost table has led to an increased storage capacity of permafrost affected soils and a higher contribution of ground water to river discharge during winter months. A progressive decrease in the thickness of the layer of seasonal freezing allows more water storage and pathways for water during the winter low period making winter discharge dependent on the timing and amount of late summer precipitation. There is a substantial seasonal variability of stable isotopic composition of river flow. Spring flooding corresponds to the isotopic composition of snow cover prior to the snowmelt. Isotopic composition of river flow during the summer period follows the variability of precipitation in smaller creeks, while the water flow of larger watersheds is influenced by the secondary evaporation of water temporarily stored in thermokarst lakes and bogs. Late summer precipitation determines the isotopic composition of texture ice within the active layer in tundra landscapes and the seasonal freezing layer in forested landscapes as well as the composition of the water flow during winter months.