AbstractRising temperatures entail important changes in the soil hydrologic processes of the northern permafrost zone. Using the ICON‐Earth System Model, we show that a large‐scale thaw of essentially impervious frozen soil layers may cause a positive feedback by which permafrost degradation amplifies the causative warming. The thawing of the ground increases its hydraulic connectivity and raises drainage rates which facilitates a drying of the landscapes. This limits evapotranspiration and the formation of low‐altitude clouds during the snow‐free season. A decrease in summertime cloudiness, in turn, increases the shortwave radiation reaching the surface, hence, temperatures and advances the permafrost degradation. Our simulations further suggest that the consequences of a permafrost cloud feedback may not be limited to the regional scale. For a near‐complete loss of the high‐latitude permafrost, they show significant temperature impacts on all continents and northern‐hemisphere ocean basins that raise the global mean temperature by 0.25 K.