Purpose - The purpose of this paper is to study the effect of trailing liquid nitrogen (LN2) heat sink on arc welding of mild steel plates. The effect on temperature field, stress and distortions are studied using experimental and numerical methods. Design/methodology/approach - The methodology consists of experimental and numerical methods. The temperature measured at a point near the arc is used to estimate the cooling capacity of the heat sink using inverse heat transfer (IHT) method. The estimated cooling flux is applied to the finite element model to study the stress and distortions using LN2 heat sink. The stresses are measured using X-ray diffraction technique and the distortions using dial gauges. Findings - IHT method has been employed in estimating the cooling capacity of the LN2 jet. This has been applied to welding to study the effect on weld induced stresses and distortions. The method can be extended to calculate the heat removal rate in various manufacturing processes where cooling is employed. Research limitations/implications - The lack of temperature dependent material properties resulted in deviation of stresses between analytical results and experiment values. Originality/value - IHT method developed for heat removal capacity of trailing heat sink is a contribution. The estimated heat flux shows good agreement in analytical and experimental temperature values. These temperatures have been extended to calculate stresses and out of plane distortions in welding and there is a reasonable agreement between finite element analysis and experimental results. © Emerald Group Publishing Limited.