This study investigates and compares soil moisture and hydrology projections of broadly used land models with permafrost processes and highlights the causes and impacts of permafrost zone soil moisture projections. Climate models project warmer temperatures and increases in precipitation (P) which will intensify evapotranspiration (ET) and runoff in land models. However, this study shows that most models project a long-term drying of the surface soil (0–20 cm) for the permafrost region despite increases in the net air–surface water flux (P-ET). Drying is generally explained by infiltration of moisture to deeper soil layers as the active layer deepens or permafrost thaws completely. Although most models agree on drying, the projections vary strongly in magnitude and spatial pattern. Land models tend to agree with decadal runoff trends but underestimate runoff volume when compared to gauge data across the major Arctic river basins, potentially indicating model structural limitations. Coordinated efforts to address the ongoing challenges presented in this study will help reduce uncertainty in our capability to predict the future Arctic hydrological state and associated land–atmosphere biogeochemical processes across spatial and temporal scales.