The impact of Arctic sea ice loss on the ocean and atmosphere is investigated focusing on a gradual reduction of Arctic sea ice by 20% of the annual mean, occurring within 30 years, starting from present-day conditions. Two ice-constraining methods are explored to melt Arctic sea ice in a coupled climate model, while keeping present-day conditions for external forcing. The first method uses a reduction of sea ice albedo, which modifies the incoming surface shortwave radiation. The second method uses a reduction of thermal conductivity, which changes the heat conduction flux inside ice. Reduced thermal conductivity inhibits oceanic cooling in winter and sea ice basal growth, reducing the seasonality of sea ice thickness. For similar Arctic sea ice area loss, decreasing the albedo induces larger Arctic warming than reducing the conductivity, especially in spring. Both ice-constraining methods produce similar climate impacts, but with smaller anomalies when reducing the conductivity. In the Arctic, the sea ice loss leads to an increase of the North Atlantic water inflow in the Barents Sea and eastern Arctic, while the salinity decreases and the gyre intensifies in the Beaufort Sea. In the North Atlantic, the subtropical gyre shifts southward and the Atlantic meridional overturning circulation weakens. A dipole of sea level pressure anomalies sets up in winter over northern Siberia and the North Atlantic, which resembles the negative phase of the North Atlantic Oscillation. In the tropics, the Atlantic intertropical convergence zone shifts southward as the South Atlantic Ocean warms. In addition, Walker circulation reorganizes and the southeastern Pacific Ocean cools.