Climate warming in the Arctic is directly connected to rising sea levels and increasing erosion of permafrost coasts, leading to inland-migrating coastlines and the transformation of coastal permafrost lakes into thermokarst lagoons. These lagoons represent transitional zones between terrestrial to sub-sea permafrost environments. So far, the effect of the transition on the carbon cycle is fairly unknown. In this study, we conducted long-term anoxic incubation experiments on surface samples from thermokarst lagoons with varying degrees of sea connectivity. We also included terrestrial permafrost and the active layer as endmembers to investigate variations in carbon dioxide (CO2) and methane (CH4) production within lagoon systems and along a land–sea transition transect on Reindeer Island, northeast Mackenzie Delta, Canada. Results show that CH4 production peaks at 4.6 mg CH4 g−1 C in younger, less connected lagoons with high-quality organic matter, leading to up to 18 times higher greenhouse gas (GHG) production (in CO2 equivalents) compared to open lagoons. CO2 production is higher under marine conditions (3.8–5.4 mg CO2 g−1 C) than under brackish conditions (1.7–4.3 mg CO2 g−1 C). Along a land–sea transect, CO2 production increased with increasing marine influence. These findings suggest that the landward migration of the sea, resulting in the inundation of permafrost lowlands and thermokarst lakes, may lead to increased GHG emissions from Arctic coasts in the future.