Carbonate rocks of the Lower Permian (Sakmarian to Kungurian) Raanes and Great Bear Cape formations accumulated in the Sverdrup Basin during a critical transition period when ocean waters cooled dramatically. These rocks have many attributes similar to sediments deposited in modern subtropical zones. The biota is dominated by a heterozoan assemblage of pelmatozoans, bryozoans, and brachiopods with the addition of photozoan elements such as fusulinids and colonial corals. Associated with the change in the Sverdrup Basin from a tropical to subtropical environment is the first occurrence of glauconite, iron oxides, and storm deposits. The shift in depositional conditions is interpreted to reflect decreased seawater temperature that was brought about by a northward migration to a mid-latitude position frequented by storms. Oceanographic change, however, was not unidirectional, but was complicated by concomitant variations in sea level and oceanography recorded as three distinct phases determined by water depth and temperature. (1) Rocks of the Raanes and lower Great Bear Cape are deep-water and heterozoan. (2) The middle Great Bear Cape records shallow-water subtropical conditions with fusulinids and large colonial corals. (3) The upper Great Bear Cape is entirely heterozoan in all locations, and by implication, all depths. All post-Raanes and Great Bear Cape rocks of the Sverdrup Basin are entirely heterozoan. Taking caution for possible evolutionary changes, subtropical carbonates can be recognized in rocks much older than previously believed. The most important components for identifying subtropical carbonates of the past are large benthic foraminifers in an otherwise heterozoan assemblage, and, as such, the ability to delineate this carbonate realm in the past is currently restricted to times when large benthic foraminifers grew in shallow-marine environments.