The Arctic Ocean is undergoing significant changes, with rapid sea ice decline, unprecedented freshwater accumulation, and pronounced regional sea level rise. In this paper, we analyzed the sea level variation in the Arctic Ocean based on a global simulation with 4.5-km resolution in the Arctic Ocean using the multi-resolution Finite Element Sea Ice-Ocean Model (FESOM). The simulation reasonably reproduces both the main spatial features of the sea surface height (SSH) and its temporal evolution in the Arctic Ocean in comparison with tide gauge and satellite data. Using the model results, we investigated the low-frequency variability of the Arctic SSH. Both the first two dominant modes of the annual-mean SSH evolution in the Arctic Ocean present decadal variability and can be mainly attributed to the variability of the halosteric height, thus the freshwater content. The first mode can be explained by the Arctic Oscillation (AO). The AO-related atmospheric circulation drives the accumulation and release of freshwater in the Arctic deep basin and the consequent ocean mass change over the continental shelf, leading to the antiphase changes in SSH between the shelf seas and the deep basin. The second mode shows an antiphase oscillation between the two Arctic deep basins, the Amerasian and Eurasian Basins, which is driven by the Arctic dipole anomaly (DA). The DA-related wind anomaly causes a spatial redistribution of freshwater between the two basins, leading to the antiphase SSH changes. By using a dedicated sensitivity simulation in which the recent sea ice decline is eliminated, we find that the sea ice decline contributed considerably to the observed sea level rise in the Amerasian Basin in the recent decades. Although the sea ice decline did not change the mean SSH averaged over the Arctic Ocean, it significantly changed the spatial pattern of the SSH trend. Our finding indicates that both the wind regime and ongoing sea ice decline should be considered to better understand and predict the changes in regional sea level in the Arctic Ocean.