Nonsorted circles, ubiquitous to the Arctic Tundra region, are patterned ground features with circular semibarren areas surrounded by vegetation. These circles are formed and persist as an ecosystem due to complex soil-water-energy-ice-plant relationships and dynamics in the Arctic. In this paper, we present the first model that captures the dynamics of the physical and biological components of the nonsorted circle ecosystem in order to understand its formation and persistence, especially in a changing climatic environment. We have applied a coupled model describing (1) vegetation dynamics (ArcVeg) and (2) coupled heat and moisture transport with phase change (WIT) in the active layer of the soil where such circles are initiated and developed. We simulated the system behavior during the formation process starting with a random vegetation development. The vegetation provided heterogeneous insulation to the soil surface. During freezing, the noninsulated areas froze first, resulting in preferential ice accumulation in those areas. The ice prevented the vegetation from developing further in those areas and thus developed and stabilized the nonsorted circle pattern. The model produced a nonsorted circle pattern that was well compared to those observed in the field. The model also illustrated that the availability of water was critical for the sustenance and stability of the nonsorted circle. The effect of climatic variations on the freezing process on the other hand did not seem to affect the formation and sustenance of nonsorted circles.