The present situation of observation and research on sea level variation in the Arctic Ocean were reviewed in this study, and the characteristics and mechanisms of the Arctic sea level variability based on the analysis of observation data and numerical simulation were summarized. It has been pointed out that the seasonal sea level variability is related to the seasonal variation of sea ice formation and melt, net precipitation minus evaporation and river runoff, and is dominated by halosteric effect. The inter-annual to decadal variability is closely related to the spatial distribution of freshwater caused by anomalous cyclonic and anticyclonic atmospheric circulation associated with the Arctic Oscillation. Halosteric change dominates the low-frequency sea level variability in the deep basin, and consequent ocean mass change dominates the sea level variation on the continental shelf and the average sea level change of the Arctic Ocean. The fast sea level rise in the Beaufort Gyre region recently can be explained by freshwater accumulation due to the enhancement of high and rapid sea ice decline in Beaufort Sea. The mean sea level of the Arctic Ocean will continue rising under the global warming. The influence of recent sea ice decline and the Greenland ice sheet melt on the Arctic sea level change needs further study. The shortage of data and uncertainty of observations still restrict the research on Arctic sea level variation and the high-resolution numerical simulation is expected to be an important tool for future research.