Abstract To investigate the inherent predictability of sea ice and its representation in climate models, we compare the seasonal-to-interannual memory of Arctic sea ice as given by lagged correlations of sea-ice area anomalies in large model ensembles (Max Planck Institute Grand Ensemble and Coupled Model Intercomparison Project phase 6) and multiple observational products. We find that state-of-the-art climate models significantly overestimate the memory of pan-Arctic sea-ice area from the summer months into the following year. This cannot be explained by internal variability. We further show that the observed summer memory can be disentangled regionally into a reemergence of positive correlations in the perennial ice zone and negative correlations in the seasonal ice zone; the latter giving rise to the discrepancy between observations and model simulations. These findings could explain some of the predictability gap between potential and operational forecast skill of Arctic sea-ice area identified in previous studies.