Arctic amplification is widely attributed to the sea-ice albedo feedback and the corresponding increase in absorbed solar radiation, yet an important, and underappreciated, contribution arises from the impact of the vertical structure of atmospheric warming on the Earth's outgoing radiation. Since the Arctic temperature profile is influenced by a number of processes, this raises questions about the physical mechanisms ultimately responsible for the so-called lapse rate feedback. Here, we show that the positive high-latitude lapse rate feedback is predominantly an atmospheric response to sea ice loss and that it is reduced in subpolar regions by an increase in poleward energy transport. To demonstrate the partitioning between these two processes, we present a novel decomposition of the lapse rate feedback into two feedbacks, one that captures surface-based warming and the other that captures changes in energy transport. Characterizing the lapse rate feedback in this manner reveals how local and remote processes shape high-latitude warming and, ultimately, influence the Earth's global climate sensitivity.