Abstract Arctic Ocean warming and sea ice loss are closely linked to increased ocean heat transport (OHT) into the Arctic and changes in surface heat fluxes. To quantitatively assess their respective roles, we use the 100-member Community Earth System Model, version 2 (CESM2), Large Ensemble over the 1920–2100 period. We first examine the Arctic Ocean warming in a heat budget framework by calculating the contributions from heat exchanges with atmosphere and sea ice and OHT across the Arctic Ocean gateways. Then we quantify how much anomalous heat from the ocean directly translates to sea ice loss and how much is lost to the atmosphere. We find that Arctic Ocean warming is driven primarily by increased OHT through the Barents Sea Opening, with additional contributions from the Fram Strait and Bering Strait OHTs. These OHT changes are driven mainly by warmer inflowing water rather than changes in volume transports across the gateways. The Arctic Ocean warming driven by OHT is partially damped by increased heat loss through the sea surface. Although absorbed shortwave radiation increases due to reduced surface albedo, this increase is compensated by increasing upwelling longwave radiation and latent heat loss. We also explicitly calculate the contributions of ocean–ice and atmosphere–ice heat fluxes to sea ice heat budget changes. Throughout the entire twentieth century as well as the early twenty-first century, the atmosphere is the main contributor to ice heat gain in summer, though the ocean’s role is not negligible. Over time, the ocean progressively becomes the main heat source for the ice as the ocean warms. Significance Statement Arctic Ocean warming and sea ice loss are closely linked to increased ocean heat transport (OHT) into the Arctic and changes in surface heat fluxes. Here we use 100 simulations from the same climate model to analyze future warming and sea ice loss. We find that Arctic Ocean warming is primarily driven by increased OHT through the Barents Sea Opening, though the Fram and Bering Straits are also important. This increased OHT is primarily due to warmer inflowing water rather than changing ocean currents. This ocean heat gain is partially compensated by heat loss through the sea surface. During the twentieth century and early twenty-first century, sea ice loss is mainly linked to heat transferred from the atmosphere; however, over time, the ocean progressively becomes the most important contributor.