Palmitic acid (PA) is ubiquitous in the biosphere and its hydrogen isotopic composition (δ2HPA) was proposed as a potential paleoenvironmental proxy for salinity, with δ2HPA values increasing with salinity. In this study, we analyzed 40 surface sediment samples from Baffin Bay and the Labrador Sea to examine the isotopic composition of PA in relation to local environmental variables, including salinity. In contrast to expectations, our results show a negative relationship between the δ2HPA and sea-surface salinity, raising questions about its pertinence/usefulness as a salinity proxy. Instead, our results suggest that the relative abundance of distinct organisms that employ different metabolisms is key in determining the hydrogen isotopic fractionations in PA. Whereas we show that PA is mostly produced through photoautotrophic metabolisms by diatoms and dinoflagellates, varying contributions from heterotrophic metabolisms may obscure the stable isotope composition of PA. Surprisingly, we found no correlation between the stable carbon isotopic composition of the sedimentary organic matter (δ13Corg) and palmitic acid (δ13CPA), implying major differences in either the dominant organisms producing sedimentary PA or in carbon isotope fractionation during lipid biosynthesis. We also found that the presence of extended sea-ice cover leads to enriched carbon and hydrogen isotopic compositions in PA. These enriched values suggest heterotrophic biodegradation in the water column and/or in the sediment as well as an increase in grazing activities. We propose that sea-ice cover and surface water oxygenation modulate the relative impact of phototrophic and heterotrophic metabolisms, and therefore the isotopic composition of marine sedimentary PA.