Katla and Eyjafjallaj¿kull volcanoes are situated 25 km apart at the southern tip of the Eastern Volcanic Zone in Iceland. Both have been active in historic time (last 1100 years) and have a history of simultaneous activity. The much more active Katla volcano has erupted at least 20 times, and Eyjafjallaj¿kull's two eruptions were contemporaneous with Katla eruptions. Following a quiet period of several decades, the seismicity beneath Eyjafjallaj¿kull was high in 1994 and again in 1999. The activity culminated in July 1999 when a flash flood occurred from the M¿rdalsj¿kull ice cap covering Katla, associated with changes in seismicity, bursts of volcanic tremor, and the formation and deepening of ice cauldrons. We report here results of deformation observations of these events, both by GPS geodesy and tilt measurements. The 1999 increase in seismicity at Eyjafjallaj¿kull was associated with significant inflation of the volcano. The deformation data are modeled by a point pressure source at 3.5 km depth beneath the flank of the volcano, about 4 km south of the summit crater. Maximum uplift of the model is 0.35 m. A similar model also explains deformation associated with the 1994 seismic crisis. The deformation field of the Katla volcano is more difficult to ascertain due to the extensive glacier coverage. Movements of points on nunataks on and near the caldera rim indicate inflation and magma movements at shallow level beneath the caldera in connection with the events of July 1999.