During the second Chinese National Arctic Research Expedition in summer 2003, sea ice cores and the underlying water were sampled from seven stations in the pack ice zone of the Canada Basin and were examined with a phase contrast microscope. A total of 102 and 78 algal species were identified for the ice cores and the underlying water, respectively, ranking in the middle range among the surveys of the Arctic Ocean up to the present despite seasonal variability. The Shannon-Wiener indices ranged from 1.40 to 4.88 with an average of 3.58 ± 0.68. Diatom species, especially pennate species, dominated in all the samples. A large number of algal spores were contained in every layer (abundance percentage > 1%). The microalgal abundances ranged from 1.4 × 104 to 8.73 × 105 cells L−1 and the biomass ranged from 0.56 to 89.49 μg L−1. They were correlated with the number of algal species (P < 0.05) but not with the diversity index (P > 0.05). Ice algal maxima were observed in various layers (bottom, interior and near the surface of the ice floes). The phytoplankton biomass in the ice-water interface was one order of magnitude lower than that in the bottom ice (P < 0.05). The species number and the diversity index in water samples, with much less biomass (P < 0.01), were comparative with the ice samples (P > 0.05). Spatial heterogeneity in both horizontal and vertical directions was the main characteristic of the algal community structure, which was demonstrated by the cluster analysis result and the distribution patterns.