Mosses dominate many northern ecosystems and their presence is integral to soil thermal and hydrological regimes which, in turn, dictate important ecological processes. Drivers, such as climate change and increasing herbivore pressure, affect the moss layer thus, assessment of the functional role of mosses in determining soil characteristics is essential. Field manipulations conducted in high arctic Spitsbergen (78 degrees N), creating shallow (3 cm), intermediate (6 cm) and deep (12 cm) moss layers over the soil surface, had an immediate impact on soil temperature in terms of both average temperatures and amplitude of fluctuations. In soil under deep moss, temperature was substantially lower and organic layer thaw occurred 4 weeks later than in other treatment plots; the growing season for vascular plants was thereby reduced by 40%. Soil moisture was also reduced under deep moss, reflecting the influence of local heterogeneity in moss depth, over and above the landscape-scale topographic control of soil moisture. Data from field and laboratory experiments show that moss-mediated effects on the soil environment influenced microbial biomass and activity, resulting in warmer and wetter soil under thinner moss layers containing more plant-available nitrogen. In arctic ecosystems, which are limited by soil temperature, growing season length and nutrient availability, spatial and temporal variation in the depth of the moss layer has significant repercussions for ecosystem function. Evidence from our mesic tundra site shows that any disturbance causing reduction in the depth of the moss layer will alleviate temperature and moisture constraints and therefore profoundly influence a wide range of ecosystem processes, including nutrient cycling and energy transfer.