Leads and polynyas play important roles in coupling the atmosphere with the Arctic Ocean. The focus of this paper is on the summer season when solar insolation into leads is the dominant mechanism for heating the upper ocean, thereby providing a source of heat for melting ice floes. The ratio of side to bottom melt determines the strength of an albedo-feedback mechanism which in turn controls the evolution of the average surface area covered by ice and open water. To determine the factors which control the flow of heat into the upper Arctic Ocean and the use of this heat to melt ice, we participated in the Surface Heat Budget of the Arctic (SHEBA) field experiment in the Beafort Sea. Measurements were made duiring the summer of 1998 from lead edges and from a small boat. Measurements included: 1) incoming and outgoing solar radiation over leads; 2) vertical profiles of temperature, salinity and optical properties on sections across and around the perimeter of leads; and 3) velocity from drogued drifters. The observations were combined with background measurements by other SHEBA investigatiors and analyzed to determine: 1) the albedo of lead surfaces; 2) the effect of optical properties on the depth of penetration and absorption of solar radiation; 3) density stratification in the upper several meters produced by ice melt; 4) the effects of wind-stirring, evaporation, sensible heat transfer, and net radiative flux on the temperature and salinity structure of the upper water column within leads