In this seasonal study, we examined the environmental controls and quantitative importance of bacterial carbon consumption in the water column and the sediment in the subarctic Kobbefjord, Greenland. Depth‐integrated bacterial production in the photic zone varied from 5.0 ± 2.7 mg C m−2 d−1 in February to 42 ± 28 mg C m−2 d−1 in May and 34 ± 7 mg C m−2 d−1 in September, corresponding to a bacterial production to primary production ratio of 0.34 ± 0.14, 0.07 ± 0.04, and 0.08 ± 0.06, respectively. Based on measured bacterial growth efficiencies (BGEs) of 0.09–0.10, pelagic bacterial carbon consumption was 54 ± 59 mg C m−2 d−1, 1194 ± 329 mg C m−2 d−1, and 689 ± 115 mg C m−2 d−1 in February, May, and September, respectively, which corresponded to 367%, 71%, and 87% of pelagic primary production. The average annual sediment respiration corresponded to 121 mg C m−2 d−1 and accounted for 17% of total microbial respiration in the system. Concentration of bioavailable dissolved organic carbon (BDOC) ranged from 144 ± 37 µg C L−1 in the riverine input to the fjord to a maximum of 341 ± 37 µg C L−1 in the surface waters in September. Parallel enrichment experiments showed that bacterial production and BGE were positively correlated with BDOC concentration, suggesting that organic carbon availability was limiting bacterial activity and carbon conversion efficiency. Viral production was low (0.8–1.8 × 104 viruses mL−1 h−1) as compared to low‐latitude environments, suggesting a relatively small effect of viruses on bacterial mortality (4–36% of cell production) and carbon cycling. Heterotrophic bacterial consumption was closely coupled with autochthonous BDOC production, and the majority of the primary production was consumed by pelagic bacteria at all seasons. The relatively low measured BGE emphasized the importance of solid on‐site BGE estimates for assessing carbon budgets in marine environments.