The Arctic Ocean receives a large amount of terrestrial dissolved organic matter (DOM) from rivers and more than half of this is removed during its passage through the Arctic Ocean. Terrestrial DOM is generally believed to have a low bioavailability and recent studies point to physicochemical processes such as sea ice formation as the source of the significant DOM removal in the Arctic Ocean. We present the results of a mesocosm experiment designed to investigate how sea ice formation affects DOM composition and bioavailability. We measured the change in different fluorescent dissolved organic matter (FDOM) fractions in sea ice, brines (contained in small pores between the ice crystals), and the underlying seawater during a 14 d experiment. Two series of mesocosms were used: one with seawater alone and one with seawater enriched with humic-rich river water. Abiotic processes increased the humic-like FDOM signal in the seawater below the ice during the initial ice formation. Humic-like FDOM fractions with a marine signal were preferentially retained in sea ice (relative to salinity), whereas humic-like FDOM with a terrestrial signal behaved more conservatively with respect to salinity. Amino acid-like FDOM and an unknown FDOM component, only previously found in Antarctic brines, were associated with biological activity and possibly extracellular polymeric substances in sea ice. An additional long-term (226–228 d) bioassay experiment with seawater collected from the mesocosm experiment revealed that 11% ± 2% of the bulk dissolved organic carbon (DOC) was bioavailable. However, 16% ± 12% of DOC expelled from the ice into the seawater below was bioavailable and the bioavailability of DOC in brine was even higher at 45%. DOM is highly susceptible to physicochemical changes during sea ice formation, leading to modifications in composition and increased bioavailability, which can in part explain terrestrial DOC removal in the Arctic Ocean.