Magnetotelluric and gravity data have been collected within a ca. 170 km long traverse running from the Pacific coast of Nicaragua in the west to the Nicaraguan Highland in the east. This part of Nicaragua is characterized by sedimentary rocks of the Pacific Coastal Plain, separated from the Tertiary volcanic rocks of the Highland by the NW-SE-trending Nicaraguan Depression. 2-D interpretation of the magnetotelluric (MT) data, collected at 13 stations, indicates four regions of high electrical conductivity in addition to the conductive coastal region. Two of these are associated with conducting sediments and pyroclastics in the upper part of the crust. Two other conductive structures have been defined at depth around 20 km and the one best defined is located below the depression. From the distribution of seismic events, volcanic activity in the depression and the similarity in geophysical characteristics with areas such as the Rio Grande Rift, this conductor is interpreted as a melt layer or a complex of magma chambers. Models of the upper lithosphere, constrained by the MT model, vertical electrical sounding (VES) data, seismic data and densities, have been tested using gravity data. A model that passes this test shows a gradual thickening of the crust eastwards from the Pacific coast. An anomaly centred over the depression is interpreted to have its origin in a thinning of the crust. In this model the melt layer is situated on top of the bulge of the lower lithosphere. A change in the composition of the crust, from the Pacific Coastal Plain to the Highland, is indicated from the change in character of the MT response and from the density distribution in the gravity model. This may support the hypothesis that the Pacific region is an accreted terrane. MT and gravity data indicate a depth to a resistive and high-density basement in the depression of ca. 2 km. On the basis of this, the vertical setting in the depression is estimated to be of the order of 2.5 km.