On the Arctic Coastal Plain (ACP) in northern Alaska (USA), permafrost and abundant surface-water storage define watershed hydrological processes. In the last decades, the ACP landscape experienced extreme climate events and increased lake water withdrawal (LWW) for infrastructure construction, primarily ice roads and industrial operations. However, their potential (combined) effects on streamflow are relatively underexplored. Here, we applied the process-based, spatially distributed hydrological and thermal Water Balance Simulation Model (10 m spatial resolution) to the 30 km2 Crea Creek watershed located on the ACP. The impacts of documented seasonal climate extremes and LWW were evaluated on seasonal runoff (May–August), including minimum 7-day mean flow (MQ7), the recovery time of MQ7 to pre-perturbation conditions, and the duration of streamflow conditions that prevents fish passage. Low-rainfall scenarios (21% of normal, one to three summers in a row) caused a larger reduction in MQ7 (−56% to −69%) than LWW alone (−44% to −58%). Decadal-long consecutive LWW under average climate conditions resulted in a new equilibrium in low flow and seasonal runoff after 3 years that included a disconnected stream network, a reduced watershed contributing area (54% of total watershed area), and limited fish passage of 20 days (vs. 6 days under control conditions) throughout summer. Our results highlight that, even under current average climatic conditions, LWW is not offset by same-year snowmelt as currently assumed in land management regulations. Effective land management would therefore benefit from considering the combined impact of climate change and industrial LWWs.