This paper presents a new hypothesis along with supporting evidence that the Beaufort Gyre (BG) plays a significant role in regulating the arctic climate variability. We propose and demonstrate that the BG accumulates a significant amount of fresh water (FW) during one climate regime (anticyclonic) and releases this water to the North Atlantic (NA) during another climate regime (cyclonic). This hypothesis can explain the origin of the salinity anomaly (SA) periodically found in the NA as well as its role in the decadal variability in the Arctic region.