In the Arctic, rising seawater temperatures and increasing underwater light caused by reductions in sea icecover are expected to change the structure of arctic marine communities. Substantial, sometimes sudden,increases in macroalgal productivity and biomass have already been observed in arctic rocky bottom communities. These macroalgal responses have been attributed to increasing temperature and light, but the relativeimportance of the suggested drivers of change has not yet been assessed. In this study, we used a mechanisticcompetition model to unravel the effects of temperature and light on benthic community structure and algaedominance, focusing on key algae species: red calcareous algae and macroalgal fronds. We find that light is theprimary driver of increases in macroalgal coverage, whereas increased seawater temperature plays a secondaryrole. Shifts leading to macroalgae dominated communities may be mediated by competitive interactions, andare likely due to three light-related processes: earlier sea ice break-out at high latitudes can result in an exponential increase in the cumulative amount of light that enters the water column during a year; threshold effect inlight requirements for algal growth; and light requirements of calcareous algae being substantially lower thanthose of macroalgae. With continued warming, our modeling results suggest that reduced sea ice coverage andincreased light availability will favor dominance of macroalgae, which due to their key ecological role areexpected to alter the structure and functioning of arctic rocky bottom ecosystems.