Readjustment of the Krafla spreading segment on the Mid-Atlantic Ridge in Iceland, after a rifting episode from 1975 to 1984, is detected by radar interferometry. Crustal deformation from 1992 to 1995 is dominated by ~24 mm/year subsidence above a shallow magma chamber at Krafla, superimposed on ~7 mm/year along-axis subsidence of the spreading segment relative to its flanks. The deformation is caused by cooling contraction at ~3 km depth and ductile flow of material away from the spreading axis, at a rate decreasing with time.¿ 1997 American Geophysical Union