Several episodes of abrupt and transient warming, each lasting between 50,000 and 200,000 years, punctuated the long-term warming during the Late Palaeocene and Early Eocene (58 to 51 Myr ago) epochs. These hyperthermal events, such as the Eocene Thermal Maximum 2 (ETM2) that took place about 53.5 Myr ago2, are associated with rapid increases in atmospheric CO2 content. However, the impacts of most events are documented only locally. Here we show, on the basis of estimates from the TEX86' proxy, that sea surface temperatures rose by 3–5 °C in the Arctic Ocean during the ETM2. Dinoflagellate fossils demonstrate a concomitant freshening and eutrophication of surface waters, which resulted in euxinia in the photic zone. The presence of palm pollen implies5 that coldest month mean temperatures over the Arctic land masses were no less than 8 °C, in contradiction of model simulations that suggest hyperthermal winter temperatures were below freezing. In light of our reconstructed temperature and hydrologic trends, we conclude that the temperature and hydrographic responses to abruptly increased atmospheric CO2 concentrations were similar for the ETM2 and the better-described Palaeocene–Eocene Thermal Maximum 55.5 Myr ago.