The Paleocene-Eocene Thermal Maximum (PETM) (55 million years ago) stands as the largest in a series of extreme warming (hyperthermal) climatic events, which are analogous to the modern day increase in greenhouse gas concentrations. Orbitally triggered (Lourens et al., 2005, Galeotti et al., 2010), the PETM is marked by a large (-3‰) carbon isotope excursion (CIE). Hypothesized to be methane driven, Zeebe et al., (2009) noted that a methane based release would only account for 3.5°C of warming. An isotopically heavier carbon, such as that of soil and C3 plants, has the potential to account for the warming and CIE (Zachos et al., 2005). During the early Eocene, high latitude surface temperatures created favorable conditions for the sequestration of terrestrial carbon. A large untapped terrestrial carbon reservoir, such as that within permafrost regions, contains the potential, if degraded, to account for the CIE as well as the global temperature increase observed during the PETM. Using an fully integrated climate model (GENESIS) with fully coupled vegetation model (BIOME4), we show that adequate conditions for permafrost growth and terrestrial carbon sequestration did exist during the lead up to the PETM. By calculating the flux of net primary production (NPP) and soil respiration (Rs), we demonstrate that the biodegradation of permafrost-based carbon reservoirs had the potential to drive the PETM. Furthermore, we show that the natural planetary response to unbalanced carbon reservoirs resulted in the terrestrial sequestration of atmospheric carbon via permafrost regeneration, yielding a vulnerable carbon reservoir for the subsequent hyperthermal.