Permafrost thaw and the subsequent mobilization of carbon (C) stored in previously frozen soil organic matter (SOM) have the potential to be a strong positive feedback to climate. As the northern permafrost region experiences as much as a doubling of the rate of warming as the rest of the Earth, the vast amount of C in permafrost soils is vulnerable to thaw, decomposition and release as atmospheric greenhouse gases. Diagnostic and predictive estimates of high-latitude terrestrial C fluxes vary widely among different models depending on how dynamics in permafrost, and the seasonally thawed 'active layer' above it, are represented. Here, we employ a process-based model simulation experiment to assess the net effect of active layer dynamics on this 'permafrost carbon feedback' in recent decades, from 1970 to 2006, over the circumpolar domain of continuous and discontinuous permafrost. Over this time period, the model estimates a mean increase of 6.8 cm in active layer thickness across the domain, which exposes a total of 11.6 Pg C of thawed SOM to decomposition. According to our simulation experiment, mobilization of this previously frozen C results in an estimated cumulative net source of 3.7 Pg C to the atmosphere since 1970 directly tied to active layer dynamics. Enhanced decomposition from the newly exposed SOM accounts for the release of both CO2 (4.0 Pg C) and CH4 (0.03 Pg C), but is partially compensated by CO2 uptake (0.3 Pg C) associated with enhanced net primary production of vegetation. This estimated net C transfer to the atmosphere from permafrost thaw represents a significant factor in the overall ecosystem carbon budget of the Pan-Arctic, and a non-trivial additional contribution on top of the combined fossil fuel emissions from the eight Arctic nations over this time period.