Climate warming is expected to have a large impact on plant species composition and productivity in northern latitude ecosystems. Warming can affect vegetation communities directly through temperature effects on plant growth and indirectly through alteration of soil nutrient availability. In addition, warming can cause permafrost to thaw and thermokarst (ground subsidence) to develop, which can alter the structure of the ecosystem by altering hydrological patterns within a site. These multiple direct and indirect effects of permafrost thawing are difficult to simulate in experimental approaches that often manipulate only one or two factors. Here, we used a natural gradient approach with three sites to represent stages in the process of permafrost thawing and thermokarst. We found that vascular plant biomass shifted from graminoid-dominated tundra in the least disturbed site to shrub-dominated tundra at the oldest, most subsided site, whereas the intermediate site was co-dominated by both plant functional groups. Vascular plant productivity patterns followed the changes in biomass, whereas nonvascular moss productivity was especially important in the oldest, most subsided site. The coefficient of variation for soil moisture was higher in the oldest, most subsided site suggesting that in addition to more wet microsites, there were other microsites that were drier. Across all sites, graminoids preferred the cold, dry microsites whereas the moss and shrubs were associated with the warm, moist microsites. Total nitrogen contained in green plant biomass differed across sites, suggesting that there were increases in soil nitrogen availability where permafrost had thawed.