Arctic ecosystems have been affected by severe climate change during the last decades. The increase in temperature in the Arctic has been almost double of the global rate of warming since the beginning of the 20th century. Like other ecosystems in the high latitude region, Arctic tundra appears to be extremely sensitive to the continuous warming of the past decades, which has led to dramatic vegetation changes such as rapid shrub expansion. While researchers are keen to talk about the shrubification of the Arctic tundra, there has been rather little attention for alternative vegetation shifts, such as those related to local permafrost collapse in lowland tundra. The general vegetation succession route of the ice-rich lowland tundra ecosystem is yet largely unknown. Therefore, we choose a typical Arctic lowland site (Kytalyk natural reserve) in the Northeastern Siberia to explore how vegetation is changing in this ecosystem, and how changes in the abiotic environment and vegetation succession interact. On the basis of field observations I assumed that the plant species composition of each vegetation patch at the study site changes continuously following cycles over time. To test this assumption, two multiple-year field experiments (Chapter 2 and Chapter 3) were carried out. In addition, we applied dendrochronological techniques (Chapter 4 and Chapter 5) and molecular tools (Chapter 4). On the basis of the results of these studies, I depicted a complete vegetation succession loop in the Arctic lowland tundra, which is closely related to the dynamics of the permafrost. In this vegetation succession loop, four stages with distinctive vegetation types have been identified. The Betula nana L. shrubs mainly dominate the well-drained elevated areas. In a field experiment, removal of B. nana shrubs resulted in abrupt permafrost degradation, rapid soil moisture increase and invasion of the grass species Arctagrostis latifolia (R. Br.) Griseb. After a short time period, when small ponds or drainages had developed, this fast-responding grass species is replaced by Eriophorum sedges. In the subsequent stage the Sphagnum mosses invade the sedge vegetation. The new Sphagnum moss carpets not only suppress the growth of Eriophorum sedges, but also create moist but unsaturated substrates that appear to be appropriate for the germination of B. nana seeds. These conditions provide new opportunities for B. nana shrubs to establish. The reproduction mode of B. nana at the study site has been studied using molecular tools (micro- satellites), as it may explain how existing B. nana patches developed and how shrub vegetation may expand in the future (Chapter 4). The conventional point of view is that sexual reproduction of perennial plants in the Arctic tundra, like B. nana, is rare due to the pressure of the harsh environment. However, the results of our molecular study (Chapter 4) tell a different story. While vegetative reproduction of B. nana is common, sexual reproduction of B. nana is more prevalent. Seed dispersal of B. nana between different patches at the study site is not hampered by the short between-patch distances, but vegetative reproduction of B. nana appeared to be restricted to 1-2 m distances from the parent plants. The influences of the climate on B. nana shrubs were further investigated using the dendrochronological analyses (Chapter 4 and Chapter 5). The radial growth of B. nana is positively correlated with early summer temperature, while relatively high summer precipitation during the warm years also stimulates the growth of B. nana. Moreover, sufficient summer precipitation facilitates the establishment of B. nana seedlings. Since sexual reproduction is prevalent at the site, it is suggested that the present B. nana shrubs established simultaneously, during periods with suitable climate conditions. Along with the vegetation succession cycles, permafrost underlying the vegetation experiences clear degradation-recovery cycles. We detected a close interaction between vegetation shifts and permafrost dynamics. While abrupt permafrost degradation drove a quick vegetation shift from the B. nana dominated stage to the water-logged Eriophorum sedge dominate stage, the changes of vegetation cover affect the stability of the permafrost as well. The removal of B. nana shrub cover triggered rapid permafrost degradation (Chapter 2), while the development of Sphagnum moss carpets, which have a high isolation capacity, reduced permafrost temperature, facilitating permafrost recovery (Chapter 3). Vegetation composition in the Arctic tundra not only influences permafrost stability, but also affects the methane emission of the site. Eriophorum sedges are able to transport methane from deep soil to the air via their aerenchyma tissues, leading to high methane fluxes. In contrast, the Sphagnum mosses significantly suppress the methane emission, since endophytic CH4-oxidizing bacteria are widespread inside the aerobic unsaturated Sphagnum carpets (Chapter 3). To sum up, our findings provide crucial information to better understand changes in the Arctic tundra ecosystem, helping to obtain better predictions of future vegetation shifts and the associated consequences for greenhouse gas emissions, permafrost stability and the heat balance of the Earth surface.