We formed interferograms of ERS-SAR scenes covering the area of Krafla (N. Iceland) with time span values of up to six years (1992--1998). Our data reveals a steady deformation rate at Krafla and within its fissure swarm, with values reaching +2.1 cm/y in the ground to satellite direction, at the volcano. The area affected by deformation extends 20 km both north and south of the volcano. The best fit dislocation model consists of sills, to the north and south of the volcano, and a magma chamber, located below the volcano, all of them undergoing contraction. ¿ 2001 American Geophysical Union