A calibrated field-scale numerical model of groundwater flow and permafrost degradation has been used in a sensitivity analysis of permafrost thaw on thermal and hydraulic parameters. The two-dimensional cryo-hydrogeological model was developed using the HEATFLOW-SMOKER code applied to the Umiujaq field site in Nunavik, Quebec, Canada, and includes coupled groundwater flow and advective–conductive heat transport with latent-heat and temperature-dependent thermal and hydraulic properties. Model sensitivity was evaluated by using the PEST code to systematically vary selected thermal and hydraulic parameters, and was quantified with respect to three system output variables or ‘targets’: subsurface temperature, groundwater velocity and ground-surface heat flux. PEST-derived model sensitivities were similar for all targets which contained subsurface temperature profiles, while sensitivities were slightly higher when only summer conditions were considered as the target compared to a full year of data. This trend was attributed to greater heat exchange at the ground surface during the summer months, leading to a more active groundwater flow system and greater feedback to the thermal regime. For all targets, the hydraulic and thermal parameters of the shallow layers (fine sand and marine silt, respectively) as well as the parameters defining the ground-surface heat exchange layer, were more sensitive compared to the deeper layers (coarse sand and gravel, and unfractured bedrock). Sensitivities were also among the highest for the ground-surface heat flux target. High model sensitivity to these parameters highlights the importance of detailed site characterization in the near-surface zone for more realistic simulations of permafrost dynamics.