AbstractFreshwater in the Arctic Ocean is one of the key climate components. It is not well understood how the capability of the Arctic Ocean to store freshwater will develop when freshwater supplies increase in a warming climate. By using numerical experiments, we find that this capability varies with the Arctic sea ice decline nonmonotonically, with the largest capability at intermediate strength of sea ice decline. Through enhancing the ocean surface stress, sea ice decline not only accumulates freshwater toward the Amerasian Basin but also tends to reduce the amount of freshwater in both the Eurasian and Amerasian basins by increasing the occupation of Atlantic‐origin water in the upper ocean. An increase in river runoff modulates the counterbalance of the two competing effects, leading to the nonmonotonic changes of the Arctic freshwater storage capability in a warming climate.