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Arctic sea ice is a critical component of the climate system, known to influence ocean circulation, earth’s albedo, and ocean–atmosphere heat and gas exchange. Current developments in the use of IP25(a sea ice proxy with 25 carbon atoms only synthesized by Arctic sea ice diatoms) have proven it to be a suitable proxy for paleo-sea ice reconstructions over hundreds of thousands to even millions of years. In the NE Baffin Bay, off NW Greenland, Melville Bugt is a climate-sensitive region characterized by strong seasonal sea ice variability and strong melt-water discharge from the Greenland Ice Sheet (GIS). Here, we present a centennial-scale resolution Holocene sea ice record, based on IP25and open-water phytoplankton biomarkers (brassicasterol, dinosterol and HBI III) using core GeoB19927-3 (73° 35.26′ N, 58° 05.66′ W). Seasonal to ice-edge conditions near the core site are documented for most of the Holocene period with some significant variability. In the lower-most part, a cold interval characterized by extensive sea ice cover and very low local productivity is succeeded by an interval (~ 9.4–8.5 ka BP) with reduced sea ice cover, enhanced GIS spring melting, and strong influence of the West Greenland Current (WGC). From ~ 8.5 until ~ 7.8 ka BP, a cooling event is recorded by ice algae and phytoplankton biomarkers. They indicate an extended sea ice cover, possibly related to the opening of Nares Strait, which may have led to an increased influx of Polar Water into NE-Baffin Bay. The interval between ~ 7.8 and ~ 3.0 ka BP is characterized by generally reduced sea ice cover with millennial-scale variability of the (late winter/early spring) ice-edge limit, increased open-water conditions (polynya type), and a dominant WGC carrying warm waters at least as far as the Melville Bugt area. During the last ~ 3.0 ka BP, our biomarker records do not reflect the late Holocene ‘Neoglacial cooling’ observed elsewhere in the Northern Hemisphere, possibly due to the persistent influence of the WGC and interactions with the adjacent fjords. Peaks in HBI III at about ~ 2.1 and ~ 1.3 ka BP, interpreted as persistent ice-edge situations, might correlate with the Roman Warm Period (RWP) and Medieval Climate Anomaly (MCA), respectively, in-phase with the North Atlantic Oscillation (NAO) mode. When integrated with marine and terrestrial records from other circum-Baffin Bay areas (Disko Bay, the Canadian Arctic, the Labrador Sea), the Melville Bugt biomarker records point to close ties with high Arctic and Northern Hemispheric climate conditions, driven by solar and oceanic circulation forcings.