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We analyze data spanning up to 5 years from 18 continuous GPS stations in Iceland, computing daily positions of the stations with three different high‐level geodetic processing software packages. We observe large‐scale crustal deformation due to plate spreading across Iceland. The observed plate divergence between the North American and the Eurasian plates is in general agreement with existing models of plate motion. Spreading is taken up within a ∼100–150 km wide plate boundary zone that runs through the island. Of the two parallel branches of the plate boundary in south Iceland, the eastern volcanic zone is currently taking up the majority of the spreading and little is left for the western volcanic zone. The plate boundary deformation field has been locally and temporarily affected in south Iceland by two Mw = 6.5 earthquakes in June 2000, inflation at Katla volcano during 2000 to 2004, and an eruption of Hekla volcano in February 2000. All stations with significant vertical velocities are moving up relative to the reference station REYK, with the highest velocity exceeding 20 mm/yr in the center of the island.

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We use data from GPS campaign and continuous measurements from 1992 to 2004 in SW Iceland to map the surface velocity field from the Reykjanes Peninsula to the Eastern Volcanic Zone. We divide the time series into preseismic (July 1992 to June 2000) and postseismic (June 2000 to May 2004) time intervals, and we estimate GPS station velocities for each interval as well as coseismic offsets due to the June 2000 earthquake sequence in the south Iceland seismic zone (SISZ). In addition to the plate spreading, the preseismic velocity field shows the effects of inflation at Hengill and Hekla volcanoes, whereas the postseismic velocities show deformation following the June 2000 earthquakes. We consider several kinematic models to explain the preseismic velocities. Our preferred model includes several dislocations and point sources in an elastic half‐space, with left‐lateral slip along the plate boundary on the Reykjanes Peninsula and below the SISZ, opening across the Reykjanes Peninsula, and the Western and Eastern rift zones. The optimal model has a locking depth of about 8 km in the central and eastern part of the Reykjanes Peninsula with a deep slip rate of about 17 mm/yr and an opening of about 9 mm/yr. This locking depth is in agreement with the thickness of the seismogenic crust on the Reykjanes Peninsula, which appears to vary between 7 and 9 km. For the SISZ, we obtain a deep slip rate of about 19 mm/yr below 16 km depth, which is considerably deeper than the earthquake hypocenter depths in the area.