We analyze data spanning up to 5 years from 18 continuous GPS stations in Iceland, computing daily positions of the stations with three different high-level geodetic processing software packages. We observe large-scale crustal deformation due to plate spreading across Iceland. The observed plate divergence between the North American and the Eurasian plates is in general agreement with existing models of plate motion. Spreading is taken up within a ~100--150 km wide plate boundary zone that runs through the island. Of the two parallel branches of the plate boundary in south Iceland, the eastern volcanic zone is currently taking up the majority of the spreading and little is left for the western volcanic zone. The plate boundary deformation field has been locally and temporarily affected in south Iceland by two Mw = 6.5 earthquakes in June 2000, inflation at Katla volcano during 2000 to 2004, and an eruption of Hekla volcano in February 2000. All stations with significant vertical velocities are moving up relative to the reference station REYK, with the highest velocity exceeding 20 mm/yr in the center of the island.