In the Arctic Mediterranean a transformation of Atlantic Water, flowing in near the surface, into overflow water, which leaves the area at depth, takes place. For this transformation the Nordic Seas are of particular importance, as they are largely ice-free and thus heat loss to the atmosphere during winter is strong. Since 2001 Argo-type profiling float measurements have been carried out in the region and enable the observation of hydrography during the whole year. The measurements concentrate on the deep basins, the Norwegian Basin, Lofoten Basin, Greenland Sea and Icelandic Plateau. They are analysed with special emphasis on the seasonal cycle in hydrography. Based on the mean seasonal cycle of temperature and salinity and atmospheric fluxes from reanalysis products for the first decade of this century heat and freshwater budgets are calculated. The residuum in the budgets gives the lateral exchange of water between the inner basins and the boundary current, circumnavigating the whole area. This lateral exchange is identified with the contribution of the deep basins to the water mass transformation within the Nordic Seas. Budget calculations, using atmospheric flux data from NCEP with corrections for high latitudes, yield a contribution of 18% to the total temperature decrease and 6% to the total salinity decrease in the Arctic Mediterranean, although the basins account for only 4% of the total area. The density increase nearly exclusively takes place in the eastern basins, whereas the Greenland Sea plays an important role in matching the temperature and salinity characteristic of the overflow water. An increasing amount of freshwater in the surface layer will have only minor effects on the strength of the overflows across the Greenland-Iceland-Scotland Ridge.