Arctic shelf seas receive greater quantities of river runoff than any other ocean region and are experiencing increased freshwater loads and associated terrestrial matter inputs since recent decades. Amplified terrestrial permafrost thaw and coastal erosion is exposing previously frozen organic matter, enhancing its mobilization and release to nearshore regions. Changing terrestrial dissolved organic matter (terr-DOM) loads and composition may alter shelf primary productivity and respiration, ultimately affecting net regional CO2 air–sea fluxes. However, the future evolution of Arctic Ocean climate feedbacks are highly dependent upon the biological degradability of terr-DOM in coastal waters, a factor often omitted in modelling studies. Here, we assess the sensitivity of CO2 air–sea fluxes from East Siberian Arctic Shelf (ESAS) waters to changing terr-DOM supply and degradability using a biogeochemical model explicitly accounting for bacteria dynamics and shifting terr-DOM composition. We find increasing terr-DOM loads and degradability trigger a series of biogeochemical and ecological processes shifting ESAS waters from a net sink to a net source of CO2, even after accounting for strengthening coastal productivity by additional land-derived nutrients. Our results suggest that future projected inputs of labile terr-DOM from peat and permafrost thaw may strongly increase the CO2 efflux from the Arctic shelf sea, causing currently unquantified positive feedback to climate change.