Modeling studies suggest that polar regions play a major role in modulating the Earth's climate and that they may be more sensitive than lower latitudes to climate change. Until recently, however, data from meteorological stations poleward of 70° have been sparse, and consequently, our understanding of air-sea-ice interaction processes is relatively poor. Satellite-borne sensors now offer a promising opportunity to observe polar regions and ultimately to improve parameterizations of energy transfer processes in climate models. This study focuses on the application of the TIROS-N operational vertical sounder (TOVS) to sea-ice-covered regions in the nonmelt season. TOVS radiances are processed with the improved initialization inversion (“3I”) algorithm, providing estimates of layer-average temperature and moisture, cloud conditions, and surface characteristics at a horizontal resolution of approximately 100 km × 100 km. Although TOVS has flown continuously on polar-orbiting satellites since 1978, its potential has not been realized in high latitudes because the quality of retrievals is often significantly lower over sea ice and snow than over other surfaces. The recent availability of three Arctic data sets has provided an opportunity to validate TOVS retrievals: the first from the Coordinated Eastern Arctic Experiment (CEAREX) in winter 1988/1989, the second from the LeadEx field program in spring 1992, and the third from Russian drifting ice stations. Comparisons with these data reveal deficiencies in TOVS retrievals over sea ice during the cold season; e.g., ice surface temperature is often 5 to 15 K too warm, microwave emissivity is approximately 15% too low at large view angles, clear/cloudy scenes are sometimes misidentified, and low-level inversions are often not captured. In this study, methods to reduce these errors are investigated. Improvements to the ice surface temperature retrieval have reduced rms errors from approximately 7 K to 3 K; correction of microwave (50 GHz) brightness temperatures for view angle dependence now allows the surface type (open water versus sea ice) to be determined; modifications to the clear/cloud tests have improved cloud detection over sea ice, especially where it is inhomogeneous; and improved surface temperature estimates have resulted in more successful diagnoses of low-level stratification. Applications of improved retrievals to studies of the Arctic energy budget are encouraging. Preliminary calculations of air-ice stress vectors, 10-m wind speed, and horizontal advection of heat and moisture are presented.