This paper presents the results of a local earthquake survey in the Molucca Sea arc-arc collision zone of eastern Indonesia. Although intermediate depth earthquakes define zones dipping to the west beneath the Sangihe arc and to the east beneath the Halmahera volcanic arc, only shallow activity (less than 60 km depth) occurred beneath the central part of the collision zone where the majority of activity is observed. The concentration of earthquake foci in the 10- to 50-km depth range in a limited region beneath the Talaud-Mayu Ridge suggests that convergence between the arc proceeds by shortening within basement of the intervening Molucca Sea plate rather than by slip along shallow dipping planes between the arcs and the subducted slabs. Published focal mechanism solutions suggest that high-angle reverse faulting beneath the Talaud-Mayu Ridge generates almost all of the seismic energy release within the collision zone. The predominance of shallow reverse and strike slip faulting at the axis of the bilaterally subducting Molucca Sea lithosphere suggests that stresses are not due to bending alone and have a large horizontal regional component perpendicular to the island arcs. The geometry and state of stress within the Molucca Sea lithosphere requires an external driving force for the convergence between the two arcs and strong degree of coupling between the island arcs and the subducting Molucca Sea plate, at least at the present stage of collision.