Over the past 50 years, Arctic sea ice has declined in all seasons, with particularly pronounced winter reductions in the Barents Sea. While temperature changes in the Atlantic Water inflow and atmospheric-driven melt have been identified as key drivers of this decline, the role of the return-flow of Atlantic Water in the northern Barents Sea Opening, linked to its recirculation back into the Nordic Seas, has remained largely unrecognized. Using a global ocean and sea ice model, we find that the volume transport of the Atlantic Water return-flow is strongly correlated with the sea ice area in the Barents Sea. In addition, we find that, over the past 40 years, the return-flow has steadily weakened without a corresponding change in inflow. Here, we show that reduced Atlantic Water removal by a weakened return-flow contributes to both interannual variability and the sustained loss of Barents Sea sea ice.