The winter Icelandic Low (IL) and surrounding region has important influences on the transport of moist static energy into the Arctic that is required to balance the high-latitude radiation deficit at the top of the atmosphere. The IL modulates the Arctic's freshwater budget, especially through its impacts on net precipitation over the Arctic Ocean and the wind and ocean current driven export of sea ice and low salinity waters out of the Arctic via Fram Strait. The IL is a complex feature, maintained by low level thermal contrasts between the relatively warm high-latitude ocean and adjacent cold sea ice and land, position downstream of the primary eastern North American longwave trough, and regional factors that promote strong synoptic development. The objective of our study is to examine some of these regional cyclone development process, with the aim of elucidating their role in Arctic’s heat and freshwater budgets. NCEP reanalysis data are used to examine winter cyclone activity for a broad area including the IL for the period for 1979-1999. We identify several key regions where strong deepening (more than 6 hPa in 6 hours) tends to be preferred. These include the area corresponding to the IL, a region near Svalbard (well to the north of the IL), and south and west of Greenland. Deepening processes in these key areas are evaluated through composite analysis and case studies. These studies make use of various NCEP fields, fields include sea level pressure, 500 hPa heights, surface and lower tropospheric temperatures and vertical motion. Important development processes include enhancement of low-level baroclinicity along the sea ice margin, large gradients in sea surface temperature, and vorticity production in the lee of southern Greenland. Efforts are underway to examine these development processes more closely using the Polar MM5 regional model.