Atmospheric measurements on the drifting Arctic sea ice station "North Pole-35" crossing the Eastern part of the Arctic Ocean during winter 2007/2008 have been compared with regional atmospheric HIRHAM model simulations. The observed near-surface temperature, mean sea level pressure and the vertical temperature, wind and humidity profiles are satisfactorily reproduced by the model. The strongest temperature differences between observations and the simulations occur near the surface due to an overestimated vertical mixing of heat in the stable Arctic boundary layer (ABL). The observations show very strong temperature inversions near the surface, whereas the simulated inversions occur frequently between the surface and 415 m at too high levels. The simulations are not able to reproduce the observed inversion strength. The regional model underestimates the wind speeds and the sharp vertical wind gradients. The strength of internal atmospheric dynamics on the temporal development of atmospheric surface variables and vertical profiles of temperature, wind and relative humidity has been examined. Although the HIRHAM model systematically overestimates relative humidity and produces too high long-wave downward radiation during winter, two different atmospheric circulation states, which are connected to higher or lower pressure systems over the Eastern part of the Arctic Ocean, are simulated in agreement with the NP-35 observations. Sensitivity studies with reduced vertical mixing of heat in the stable ABL have been carried out. A slower increase in the stability functions with decreasing Richardson number under stable stratification has an impact on the horizontal and vertical atmospheric structure. Changes in synoptical cyclones on time scales from 1–3 days over the North Atlantic cyclone path are generated, which influences the atmospheric baroclinic and planetary waves on time scales up to 20 days over the Arctic Ocean basin. The use of increased vertical stability in the model simulation leads to diminished planetary-scale variability over the Arctic Ocean.