The Arctic experiences a high-radiation environment in the summer with 24-hour daylight for more than two months. Damage to plants and ecosystem metabolism can be muted by overcast conditions common in much of the Arctic. However, with climate change, extreme dry years and clearer skies could lead to the risk of increased photoxidation and photoinhibition in Arctic primary producers. Mosses, which often exceed the NPP of vascular plants in Arctic areas, are often understudied. As a result, the effect of specific environmental factors, including light, on these growth forms is poorly understood. Here, we investigated net ecosystem exchange (NEE) at the ecosystem scale, net Sphagnum CO2 exchange (NSE), and photoinhibition to better understand the impact of light on carbon exchange from a moss-dominated coastal tundra ecosystem during the summer season 2006. Sphagnum photosynthesis showed photoinhibition early in the season coupled with low ecosystem NEE. However, later in the season, Sphagnum maintained a significant CO2 uptake, probably for the development of subsurface moss layers protected from strong radiation. We suggest that the compact canopy structure of Sphagnum reduces light penetration to the subsurface layers of the moss mat and thereby protects the active photosynthetic tissues from damage. This stress avoidance mechanism allowed Sphagnum to constitute a significant percentage (up to 60%) of the ecosystem net daytime CO2 uptake at the end of the growing season despite the high levels of radiation experienced.