The Energy Exascale Earth System Model (E3SM) is a state-of-the-science Earth system model (ESM) with the ability to focus horizontal resolution of its multiple components in specific areas. Regionally refined global ESMs are motivated by the need to explicitly resolve, rather than parameterize, relevant physics within the regions of refined resolution, while offering significant computational cost savings relative to the respective cost of configurations with high-resolution (HR) everywhere on the globe. In this paper, we document results from the first Arctic regionally refined E3SM configuration for the ocean and sea-ice components (E3SM-Arctic-OSI), while employing data-based atmosphere, land, and hydrology components. Our aim is an improved representation of the Arctic coupled ocean and sea-ice state, its variability and trends, and the exchanges of mass and property fluxes between the Arctic and the sub-Arctic. We find that E3SM-Arctic-OSI increases the realism of simulated Arctic ocean and sea-ice conditions compared to a similar low-resolution E3SM simulation without the Arctic regional refinement in ocean and sea-ice components (E3SM-LR-OSI). In particular, exchanges through the main Arctic gateways are greatly improved with respect to E3SM-LR-OSI. Other aspects, such as the Arctic freshwater content variability and sea-ice trends, are also satisfactorily simulated. Yet, other features, such as the upper-ocean stratification and the sea-ice thickness distribution, need further improvements, involving either more advanced parameterizations, model tuning, or additional grid refinements. Overall, E3SM-Arctic-OSI offers an improved representation of the Arctic system relative to E3SM-LR-OSI, at a fraction (15 %) of the computational cost of comparable global high-resolution configurations, while permitting exchanges with the lower-latitude oceans that cannot be directly accounted for in Arctic regional models.