Conjugating green algae of the genus Zygnema (Zygnematophyceae, Streptophyta) are dominant eukaryotic components of hydro-terrestrial microbial mats in the Arctic. Considering the harsh environmental conditions, the aim of this study was to elucidate mechanisms that enable Zygnema spp. to thrive in this habitat. We hypothesized that changes in morphology, physiological performance, and stress tolerance take place during the annual life cycle of the algae. We thus selected four natural populations of Zygnema spp. on Svalbard and investigated them throughout the vegetation season by means of light microscopy and chlorophyll a fluorescence. Additionally, we also investigated one overwintering population. No formation of specialized resting stages (e.g., dormant zygospores) was observed. Markedly, Zygnema spp. survived harsh periods as modified vegetative cells, i.e., pre-akinetes. Pre-akinetes tolerate both desiccation during summer and freezing in winter. These cells are not dormant and therefore recover their physiological activity immediately after transfer to favorable conditions, undergoing rapid growth in the early spring. Nevertheless, once pre-akinetes begin to grow, these newly produced vegetative cells lose stress tolerance. Such rapid dehardening explains their high mortality due to frequent freeze–thaw cycles in the early spring. Arctic Zygnema spp. thus face a phenological trade-off between missing the early growing season and experiencing frost damage.