Terrestrial organic matter (terrOM) stored in high latitude permafrost soils represents one of the largest carbon pools on Earth. This pool of carbon is highly vulnerable to climatic changes, due to its susceptibility to mobilization during permafrost thawing, increasing river discharge and sea level rise. The release and transport of pre-aged terrOM from permafrost regions to the Arctic Ocean potentially triggers important feedback mechanisms including increased greenhouse gas emissions. Despite its importance, terrOM fluxes to the Arctic Ocean are poorly investigated and processes effecting the fluxes are ill-constrained. The main driver for terrOM flux in permafrost regions is coastal erosion, which currently releases 14 Tg of terrOC per year into the whole Arctic Ocean. Nevertheless, these estimations and related climate models disregard/underestimate terrOM burial rates for nearshore regions and basins that are considered as carbon and nutrient sinks. Detailed carbon, nutrient and sediment budgets for nearshore zones and basins however do not exist. To illustrate the importance of nearshore regions for global carbon fluxes we investigated the OM composition of the small, shallow nearshore Herschel Basin, located in the Beaufort Sea. The basin receives OM from marine primary production, coastal erosion (of the Yukon Coast and Herschel Island) as well as from the Mackenzie River. The so far unknown relative contributions of these sources to the basin is of vital importance to understand the regional carbon fluxes. In order to quantify the relative contributions the lipid composition, bulk d13C values and radiocarbon ages of the sources were determined to characterize and define individual endmembers. The same properties were determined for 20 sediment samples and 1 sediment core retrieved from the basin and a Monte Carlo simulation was performed to calculate the relative contributions based on a dual carbon approach and lipid endmembers. Results indicate that surface sediment OM in the basin is very old (~20 ka) and of predominantly terrestrial origin. Approximately 60% of the OM in the basin can be assigned to eroded material from the nearby Herschel Island, illustrating the importance of permafrost thawing and coastal erosion to the carbon budget off nearshore zones. Further, enhanced burial rates and increased terrOM supply observed in the sediment core suggest intensification of coastal erosion over the recent decades.