Precise temperature data from four Alaskan permafrost sites (Prudhoe Bay, Barrow and two sites near Fairbanks) combined with computer modelling provide quantitative measures of the existence and dynamics of unfrozen water in the active layer and permafrost. Unfrozen water contents are negligible for living and dead moss layers, small in the peat layers and larger in the silts, and show significant site-to-site variation. The effect of unfrozen water on the ground thermal regime is largest immediately after freeze-up and during cooling of the active layer. It is less important during warming and thawing of the active layer and during freezing and thawing of seasonally frozen ground. The effects last less than a month in cold permafrost and throughout most of the freeze-up period in warm permafrost. Physically, unfrozen water introduces a spatially distributed latent heat and changes thermal properties which retards the thermal response of an active layer or permafrost. Unfrozen water in the freezing and frozen active layer and nearsurface permafrost also protects the ground from rapid cooling and creates a strong thermal gradient at the ground surface that increases the heat flux out of the ground. This enlarged heat flux also enhances the insulating effect of the snow cover. There do not appear to be any inherent difficulties in using conductive heat modelling for the active layer during the period when the zero curtain exists. Copyright (C) 2000 John Wiley & Sons, Ltd.