Arctic sea ice extent (SIE) is declining at an accelerating rate with a wide range of ecological consequences. However, determining sea ice effects on tundra vegetation remains a challenge. In this study, we examined the universality or lack thereof in tundra shrub growth responses to changes in SIE and summer climate across the Pan-Arctic, taking advantage of 23 tundra shrub-ring chronologies from 19 widely distributed sites (56°N to 83°N). We show a clear divergence in shrub growth responses to SIE that began in the mid-1990s, with 39% of the chronologies showing declines and 57% showing increases in radial growth (decreasers and increasers, respectively). Structural equation models revealed that declining SIE was associated with rising air temperature and precipitation for increasers and with increasingly dry conditions for decreasers. Decreasers tended to be from areas of the Arctic with lower summer precipitation and their growth decline was related to decreases in the standardized precipitation evapotranspiration index. Our findings suggest that moisture limitation, associated with declining SIE, might inhibit the positive effects of warming on shrub growth over a considerable part of the terrestrial Arctic, thereby complicating predictions of vegetation change and future tundra productivity.