Near the north pole of Mars, dusty water ice is exposed at the surface within the residual polar cap and in isolated high-latitude deposits. Its optical properties contain information about surface processes and climate evolution. However, the physical properties of martian water ice are challenging to constrain because the reflectance of ice is highly sensitive to its grain size and dust content. While previous spectral analyses of martian polar ice have relied on various radiative transfer models, recent work demonstrates that commonly-used formulations such as the Hapke and Shkuratov models can produce systematic errors in derived grain radii and yield physically implausible parameter combinations, necessitating a more rigorous reanalysis to robustly constrain polar ice properties. Here we use a radiative transfer model validated against well-constrained measurements of terrestrial firn and ice with consistent optical properties of water ice and martian dust to infer the grain size and dust content of exposed water ice across the north polar cap region from spectral observations. We find that dust concentrations in surface ice are < 3% by mass, substantially lower than previous estimates of up to ~ 25%. Our revised values are consistent with radar-derived bulk impurity limits (~ 13% by mass) whilst accounting for vertically heterogeneous layers of relatively clean ice (0.05–0.5% dust) interbedded with more dust-rich marker beds (25–75% dust). We further show that seasonal albedo variations are best explained by the deposition and sublimation of fine-grained dusty frosts (< 100 µm radius, 1–2% dust) over cleaner, coarse-grained ice (> 500 µm radius, < 1% dust), rather than by ice grain metamorphism, which occurs too slowly (< 100 µm per Mars year at polar temperatures) to account for the observed changes. The comparatively low dust content of the coarse-grained ice implies formation under a less dust-laden atmospheric regime than today. Our findings can provide improved constraints for models of polar energy balance, ice stability and dust transport, with implications for the evolution of Mars’ climate over time.