The Southern Ocean overturning circulation is driven by winds, heat fluxes, and freshwater sources. Among these sources of freshwater, Antarctic sea-ice formation and melting play the dominant role. Even though ice-shelf melt is relatively small in magnitude, it is located close to regions of convection, where it may influence dense water formation. Here, we explore the impacts of ice-shelf melting on Southern Ocean water mass transformation (WMT) using simulations from the Energy Exascale Earth System Model (E3SM) both with and without the explicit representation of melt fluxes from beneath Antarctic ice shelves. We find that ice-shelf melting enhances transformation of Upper Circumpolar Deep Water (UCDW), converting it to lower density values. While the overall differences in Southern Ocean WMT between the two simulations are moderate, freshwater fluxes produced by ice-shelf melting have a further, indirect impact on the Southern Ocean overturning circulation through their interaction with sea-ice formation and melting, which also cause considerable upwelling. We further find that surface freshening and cooling by ice-shelf melting causes increased Antarctic sea-ice production and stronger density stratification near the Antarctic coast. In addition, ice-shelf melting causes decreasing air temperature, which may be directly related to sea-ice expansion. The increased stratification reduces vertical heat transport from the deeper ocean. Although the addition of ice-shelf melting processes leads to no significant changes in Southern Ocean WMT, the simulations and analysis conducted here point to a relationship between increased Antarctic ice-shelf melting and the increased role of sea ice in Southern Ocean overturning.