Marine heatwaves are increasing in frequency and intensity as climate change progresses, especially in the highly productive Arctic regions. Although their effects on primary producers will largely determine the impacts on ecosystem services, mechanistic understanding on phytoplankton responses to these extreme events is still very limited. We experimentally exposed Arctic phytoplankton assemblages to stable warming, as well as to repeated heatwaves, and measured temporally resolved productivity, physiology, and composition. Our results show that even extreme stable warming increases productivity, while the response to heatwaves depends on the specific scenario applied and is not predictable from stable warming responses. This appears to be largely due to the underestimated impact of the cool phase following a heatwave, which can be at least as important as the warm phase for the overall response. We show that physiological and compositional adjustments to both warm and cool phases drive overall phytoplankton productivity and need to be considered mechanistically to predict overall ecosystem impacts.