The under‐ice fluid dynamics during late winter in many freshwater settings remain poorly understood. One example is how cabbeling, the generation of dense water by mixing water masses on different sides of the temperature of maximum density (Tmd), affects the vertical transport. Using high resolution numerical simulations of the development of a stratified parallel shear flow, we show that when the temperature stratification passes through Tmd, cabbeling modifies the three‐dimensional aspects of the instability with the net effect of forming an emergent, stable stratification after a brief period of strong mixing. This stratification effectively separates the quiescent upper layer from the turbulent one below, thereby limiting transport and mixing between them. We propose a simple model for the vertical fluid flux during the mixing regime, and discuss a potential mechanism responsible for the emergent stratification as well as its sensitivity to the bulk Richardson number. Plain Language Summary: In late winter, many lakes in temperate climates remain ice covered while warmer water from adjacent rivers flow into the lake beneath the ice. Due to the fact that freshwater has a temperature of maximum density around four degrees, this sets up a situation in which river inflows can lead to mixing processes in the so‐called cabbeling regime. Cabbeling is the process by which two masses of freshwater mix to form a denser mass. This in turn leads to more mixing as the dense water mass sinks. Using high resolution numerical simulations, we demonstrate that the instability process leads to the creation of two distinct zones in the water column. After an initial burst of activity, mixing between the two regions is greatly reduced. In contrast to warmer climates, the system does not return to a marginally stable state. Since ice covered waters lack a mechanism for mechanical forcing, cabbeling shear instability provides a potentially dominant means to enhance vertical transport for the water column outside a thin near‐surface region. Key Points: The nonlinear freshwater equation of state leads to creation of a denser mass of water by mixing lighter masses of water (called cabbeling)Cabbeling generates a large scale instability that effectively entrains fluid in a parallel shear flow transporting heat downwardsThe cabbeling instability drives a competing process that also strengthens the stratification of the interface [ABSTRACT FROM AUTHOR]