Lakes, of average size 33 ha, occupy a quarter of the surface area of Richards Island, Northwest Territories. Most of the lakes have a central pool deeper than the thickness of winter ice, and many have prominent, shallow, littoral terraces. The relatively warm lake bottoms cause considerable disturbance to the surrounding continuous permafrost. Water and lake-bottom temperatures, the configuration of permafrost, and active-layer thickness were measured at a tundra lake between 1992 and 1997. The lake is oval, 1.6 km long, 800 m wide, and as deep as 13 m. Sandy terraces, covered by less than 1 m of water, extend over 100 m from the shore. The terraces are underlain by permafrost, which terminates almost vertically at their edge. The annual mean temperature measured at lake bottom in the central pool ranged between 1.5°C and 4.8°C, depending on depth, and between -0.2°C and -5°C on the terraces, due to differences in snow cover and proximity to the central pool. In consequence, the temperature of permafrost at 7 m depth in the terraces also varied, from -2°C near shore to -5°C in mid-terrace. The active layer in the terraces was uniformly 1.4 m deep. Geothermal modelling of talik configuration indicates that there is no permafrost beneath the central pool of the lake. The modelling indicates that, under equilibrium conditions, about one quarter of the lakes on Richards Island have taliks that penetrate permafrost, and at least 10-15% of the island is underlain by talik. Short-term climatic changes predicted for the region imply a small increase in summer lake-water temperature and an extension of the open-water season, accompanied by thicker snow cover in winter. Following such changes, with longer freeze-up and warmer terrace temperatures in winter, permafrost may not be sustainable in the lake terraces.