Collapse of permafrost coasts delivers large quantities of particulate organic carbon (POC) to Arctic coastal areas. With rapidly changing environmental conditions, sediment and organic carbon (OC) mobilization and transport pathways are also changing. Here, we assess the sources and sinks of POC in the highly dynamic nearshore zone of Herschel Island-Qikiqtaruk (Yukon, Canada). Our results show that POC concentrations sharply decrease, from 15.9 to 0.3 mg L−1, within the first 100–300 m offshore. Simultaneously, radiocarbon ages of POC drop from 16,400 to 3,600 14C years, indicating rapid settling of old permafrost POC to underlying sediments. This suggests that permafrost OC is, apart from a very narrow resuspension zone (<5 m water depth), predominantly deposited in nearshore sediments. While long-term storage of permafrost OC in marine sediments potentially limits biodegradation and its subsequent release as greenhouse gas, resuspension of fine-grained, OC-rich sediments in the nearshore zone potentially enhances OC turnover.