Llaima volcano, Chile, is a typical basaltic‐to‐andesitic stratovolcano in the southcentral Andes. Llaima had at least four explosive eruptions in the decade 2000 – 2010, however little is known about the physical processes and magma storage at this volcano. In this study we present an InSAR deformation field at Llaima from 2003 – 2008, covering both the post‐eruptive and syn‐eruptive periods. The satellite InSAR data are significantly affected by environmental decorrelation due to steep topography, snow and vegetation; because of this, we applied a model‐assisted phase unwrapping approach. The analysis of these data suggests two main deformation episodes: subsidence associated with the post‐eruptive period, and uplift associated with the syn‐eruptive period. Maximum summit subsidence and uplift are ∼10 cm and ∼8 cm, respectively. Through inverse modeling of both periods, a deflating and inflating magma body can be inferred, located at a depth of 4 – 12 km, subject to a volume decrease of 10 – 46 × 106 m3 during the subsidence period, followed by a volume increase of 6 – 20 × 106 m3 during the uplift period. Therefore, this study presents the first evidence of magma‐driven deformation at Llaima volcano, and suggests that eruption periods are associated with the inflation and deflation of a deep magma body that can be monitored by using space geodesy.