The European Arctic experienced a pronounced warming around 1920 and a sustained warm period in the 1920s and 1930s. The causes of this climatic event are not fully known. However, understanding this event is considered important for assessing current and future climate change in the Arctic. Here we investigate the role of atmospheric circulation variability based on newly available historical upper-air data and statistical reconstructions of atmospheric circulation. The strongest warming at the ground from the 1910s to the 1920s and 1930s was found in wintertime. Historical upper-air data in this region from the 1930s show warm temperatures also in the lower troposphere. Reconstructed geopotential height fields suggest stronger than normal meridional transport of warm air into the European Arctic during the warm period compared to the preceding cold period. We propose that the 1920-1940 warm period can be subdivided into two periods with distinct circulation regimes: During the 1920s, warm, relatively clean air masses from the North Atlantic lead to a warming, while during the 1930s warm, rather polluted air masses from Western Europe played an important role. This is reflected in a sudden increase in sulphate concentrations in an ice core from Svalbard around 1930. The aerosols might have amplified the warming via changing cloud long wave emissivity, but this mechanism remains to be further studied. The circulation anomalies in the North Atlantic region during the early 20th century warm period that are shown in this paper form an observation-based counterpart against which model studies can be compared.