Accurately simulating the interactions between the components of a coupled Earth modelling system (atmosphere, sea-ice, and wave) on a kilometer-scale resolution is a new challenge in operational numerical weather prediction. It is difficult due to the complexity of interactive mechanisms, the limited accuracy of model components and scarcity of observations available for assessing relevant coupled processes. This study presents a newly developed convective-scale atmosphere-wave coupled forecasting system for the European Arctic. The HARMONIE-AROME configuration of the ALADIN-HIRLAM numerical weather prediction system is coupled to the spectral wave model WAVEWATCH III using the OASIS3 model coupling toolkit. We analyze the impact of representing the kilometer-scale atmosphere-wave interactions through coupled and uncoupled forecasts on a model domain with 2.5 km spatial resolution. In order to assess the coupled model’s accuracy and uncertainties we compare 48-hour model forecasts against satellite observational products such as Advanced Scatterometer 10 m wind speed, and altimeter based significant wave height. The fully coupled atmosphere-wave model results closely match both satellite-based wind speed and significant wave height observations as well as surface pressure and wind speed measurements from selected coastal station observation sites. Furthermore, the coupled model contains smaller standard deviation of errors in both 10m wind speed and significant wave height parameters when compared to the uncoupled model forecasts. Atmosphere and wave coupling reduces the short term forecast error variability of 10m wind speed and significant wave height with the greatest benefit occurring for high wind and wave conditions.