Photophysiological and biochemical characteristics were investigated in natural communities of Arctic sea ice algae and phytoplankton to understand their respective responses towards variable irradiance and nutrient regimes. This study revealed large differences in photosynthetic efficiency and capacity between the 2 types of algal assemblages. Sea ice algal assemblages clearly displayed increased photoprotective energy dissipation under the highest daily average irradiance levels (>8 µmol photons m-2 s-1). In contrast, phytoplankton assemblages were generally light-limited within the same irradiance ranges. Furthermore, phytoplankton assemblages exhibited more efficient carbon assimilation rates in the low irradiance range compared to sea ice algae, possibly explaining the ability of phytoplankton to generate substantial under-ice blooms. They were also able to readily adjust and increase their carbon production to higher irradiances. The Arctic is warming more rapidly than any other oceanic region on the planet, and as a consequence, irradiance levels experienced by microalgae are expected to increase due to declining ice thickness and snow cover, as well as enhanced stratification. The results of this study suggest that sea ice algae may have less capacity to adapt to the expected environmental changes compared to phytoplankton. We therefore anticipate a change in sea ice-based vs. pelagic primary production with respect to timing and quantity in a future Arctic. The clearly distinct responses of sea ice algae vs. phytoplankton need to be incorporated into model scenarios of current and future Arctic algal blooms and considered when predicting implications for the entire ecosystem and associated biogeochemical fluxes.