The pattern of historical ground deformation, seismicity, and crustal structure near Medicine Lake volcano illustrates a close relation between magmatism and tectonism near the margin of the Cascade volcanic chain and the Basin and Range tectonic province. Between leveling surveys in 1954 and 1989 the summit of Medicine Lake volcano subsided 389±43 mm with respect to a reference bench mark 40 km to the southwest (average rate = 11.1±1.2 mm/yr). A smaller survey across the summit caldera in 1988 suggests that the subsidence rate was 15–28 mm/yr during 1988–1989. Swarms of shallow earthquakes (M ≤ 4.6) occurred in the region during August 1978, January–February 1981, and September 1988. Except for the 1988 swarm, which occurred beneath Medicine Lake caldera, most historical earthquakes were located at least 25 km from the summit. The spatial relation between subsidence and seismicity indicates (1) radially symmetric downwarping of the volcano's summit and flanks centered near the caldera and (2) downfaulting of the entire edifice along regional faults located 25–30 km from the summit. We propose that contemporary subsidence, seismicity, and faulting are caused by (1) loading of the crust by more than 600 km3 of erupted products plus a large volume of mafic intrusives; (2) east‐west extension in the western Basin and Range province; and, to a lesser extent, (3) crystallization or withdrawal of magma beneath the volcano. Thermal weakening of the subvolcanic crust by mafic intrusions facilitates subsidence and influences the distribution of earthquakes. Subsidence occurs mainly by aseismic creep within 25 km of the summit, where the crust has been heated and weakened by intrusions, and by normal faulting during episodic earthquake swarms in surrounding, cooler terrain.