The growth of age-0 Arctic grayling Thymallus arcticus in two adjacent watersheds with differing numbers of lakes was compared. Age-0 Arctic grayling grew faster in the watershed with numerous lakes (eight) than in the watershed with only one lake. The presence of lakes along the stream courses in both watersheds decreased stream temperatures in the spring but increased temperatures in summer. The size of substrates was greater in streams below lakes than in inlet stream reaches. Growth rates of discrete populations of age-0 Arctic grayling were positively related to stream temperature. No relationship between fish growth rate and the biomass of invertebrate drift was apparent. We conclude that the summer increase in stream temperatures attributable to the presence of lakes resulted in increased growth of Arctic grayling in the watershed with numerous lakes. A simulation model of the temperature-dependent growth of age-0 Arctic grayling indicated that the abundance of lakes in one of the watersheds enhanced the potential production of Arctic grayling almost sixfold.