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The current distribution and future projections of permafrost are examined in a fully coupled global climate model, the Community Climate System Model, version 3 (CCSM3) with explicit treatment of frozen soil processes. The spatial extent of simulated present‐day permafrost in CCSM3 agrees well with observational estimates – an area, excluding ice sheets, of 10.5 million km². By 2100, as little as 1.0 million km² of near‐surface permafrost remains. Freshwater discharge to the Arctic Ocean rises by 28% over the same period, largely due to increases in precipitation that outpace increases in evaporation, with about 15% of the rise directly attributable to melting ground ice. Such large changes in permafrost may provoke feedbacks such as activation of the soil carbon pool and a northward expansion of shrubs and forests.