Ice-wedge polygons are common features of lowland tundra in the continuous permafrost zone and prone to rapid degradation through melting of ground ice. There are many interrelated processes involved in ice-wedge thermokarst and it is a major challenge to quantify their influence on the stability of the permafrost underlying the landscape. In this study we used a numerical modelling approach to investigate the degradation of ice wedges with a focus on the influence of hydrological conditions. Our study area was Samoylov Island in the Lena River delta of northern Siberia, for which we had in situ measurements to evaluate the model. The tailored version of the CryoGrid 3 land surface model was capable of simulating the changing microtopography of polygonal tundra and also regarded lateral fluxes of heat, water, and snow. We demonstrated that the approach is capable of simulating ice-wedge degradation and the associated transition from a low-centred to a high-centred polygonal microtopography. The model simulations showed ice-wedge degradation under recent climatic conditions of the study area, irrespective of hydrological conditions. However, we found that wetter conditions lead to an earlier onset of degradation and cause more rapid ground subsidence. We set our findings in correspondence to observed types of ice-wedge polygons in the study area and hypothesized on remaining discrepancies between modelled and observed ice-wedge thermokarst activity. Our quantitative approach provides a valuable complement to previous, more qualitative and conceptual, descriptions of the possible pathways of ice-wedge polygon evolution. We concluded that our study is a blueprint for investigating thermokarst landforms and marks a step forward in understanding the complex interrelationships between various processes shaping ice-rich permafrost landscapes.