The Arctic and Boreal Region (ABR) is subject to extensive land cover change (LCC) due to elements such as wildfire, permafrost thaw, and shrubification. The natural and anthropogenic ecosystem transitions (i.e. LCC) alter key ecosystem characteristics including land surface temperature (LST), albedo, and evapotranspiration (ET). These biophysical variables are important in controlling surface energy balance, water exchange, and carbon uptake which are important factors influencing the warming trend over the ABR. However, to what extent these variables are sensitive to various LCC in heterogeneous systems such as ABR is still an open question. In this study, we use a novel data-driven approach based on high-resolution land cover data (2003 and 2013) over four million km2 to estimate the impact of multiple types of ecosystem transitions on LST, albedo, and ET. We also disentangle the contribution of LCC vs. natural variability of the system in changes in biophysical variables. Our results indicate that from 2003 to 2013 about 46% (∼2 million km2) of the region experienced LCC, which drove measurable changes to the biophysical environment across ABR over the study period. In almost half of the cases, LCC imposes a change in biophysical variables against the natural variability of the system. For example, in ∼35% of cases, natural variability led to −1.4 ± 0.9 K annual LST reduction, while LCC resulted in a 0.9 ± 0.6 K LST increase, which dampened the decrease in LST due to natural variability. In some cases, the impact of LCC was strong enough to reverse the sign of the overall change. Our results further demonstrate the contrasting sensitivity of biophysical variables to specific LCC. For instance, conversion of sparsely vegetated land to a shrub (i.e. shrubification) significantly decreased annual LST (−2.2 ± 0.1 K); whereas sparsely vegetated land to bare ground increased annual LST (1.6 ± 0.06 K). We additionally highlight the interplay between albedo and ET in driving changes in annual and seasonal LST. Whether our findings are generalizable to the spatial and temporal domain outside of our data used here is unknown, but merits future research due to the importance of the interactions between LCC and biophysical variables.