Climate-induced changes to permafrost are altering high latitude landscapes in ways that could increase the vulnerability of the vast soil carbon pools of the region. Permafrost thaw is temporally dynamic and spatially heterogeneous because, in addition to the thickening of the active layer, localized thermokarst features form when ice-rich permafrost thaws and the ground subsides. Thermokarst produces a diversity of landforms and alters the physical environment in dynamic ways. To estimate potential changes to the carbon cycle it is imperative to quantify the size and distribution of thermokarst landforms. By performing a supervised classification on a high resolution IKONOS image, we detected and mapped small, irregular thermokarst features occurring within an upland watershed in discontinuous permafrost of Interior Alaska. We found that 12% of the Eight Mile Lake (EML) watershed has undergone thermokarst, predominantly in valleys where tussock tundra resides. About 35% of the 3.7 km2 tussock tundra class has likely transitioned to thermokarst. These landscape level changes created by permafrost thaw at EML have important implications for ecosystem carbon cycling because thermokarst features are forming in carbon-rich areas and are altering the hydrology in ways that increase seasonal thawing of the soil.