Climate warming is expected to have considerable impact on the regional water balance of high latitude Arctic and sub-Arctic glacerized watersheds. In this study we combine field observations and the physically based Water Balance Simulation Model WaSiM to refine our understanding of the linkages between glaciers, permafrost and hydrology at two nearby basins with contrasting precipitation regimes: Jarvis Cr. watershed (630 km2) on the north (rain-shadow) side of Eastern Alaska Range and the south facing Phelan Cr. (32 km2), which include the US Geological Survey benchmark site Gulkana Glacier. Both are characterized by a semi-arid climate and are sub-watersheds of the Tanana River basin (12,000 km2). Our research questions include: How has glacier water storage and release varied in the past and how are they expected to change in the future? And what are the subsequent effects on lowland runoff and regional groundwater recharge? Our analyses show i) an increase in air temperature and summer warmth index (the sum of all mean monthly air temperature above 0 °C) in recent decades and ii) a continued negative glacier mass balance. Our findings suggest that, on the larger spatial scale (Tanana River basin), the reduced glacier coverage and increased glacier wastage has, in combination with limited changes in precipitation, lead to (i) increased mean annual and (ii) late winter (March) runoff. We postulate that this is due to increased groundwater recharge, which has been fueled by the 20% reduction in glacier coverage of the Tanana River basin. Here we aim to assess the combined effect of climate change, glacier shrinkage and thawing permafrost on the regional sub-arctic mountain- to lowland hydrologic system, which may transition into a regime with less surface and more subsurface water availability.