The mid-Atlantic plate boundary in Iceland is expressed by a series of seismic and volcanic zones. The structure of the plate boundary is strongly influenced by the Iceland hot spot. The relative motion of the Mid-Atlantic Ridge with respect to the hot spot leads to ridge jumps, propagating rifts and other complexities. Most large earthquakes in Iceland occur within two transform zones that connect the presently active Northern and Eastern Volcanic Zones to the ridges offshore. In the south the South Iceland Seismic Zone is marked by a 10-15 km wide, E-trending epicentral belt. The large earthquakes occur by faulting on N-S striking right-lateral faults. The left-lateral transform motion along the zone thus appears to be taken up by slip on numerous parallel faults by counterclockwise rotation of the blocks between them (bookshelf tectonics). It is argued that the South Iceland Seismic Zone is a transient feature, migrating sideways in response to propagation of the Eastern Volcanic Zone. In Northern Iceland the transform motion is taken up along the Tjörnes Fracture Zone. At least three parallel, NW-trending seismic belts have been identified within the zone. The seismicity of the volcanic zones is characterized by spatial clustering of epicenters. Most clusters coincide with central volcanoes. Rifting structures such as fissure swarms and normal faults are mostly aseismic except during episodes of rifting and magmatism such as the present events in Krafla. Earthquake recording has been used very successfully at Krrafla to monitor the level of inflation and deflation of the volcano, and to trace the path and speed of lateral magmatic intrusions into the associated fissure swarm. Seismic activity at the Bárdarbunga volcano in Central Iceland correlates in time with the Krafla events, and it seems as if inflation of Krafla is followed by deflation of Bárdarbunga. It is postulated that the pressure drop in the partially molten mantle beneath Krafla is transmitted to neighboring volcanoes, leading to magma withdrawal from their shallow reservoirs. Bursts of seismicity of the Katla volcano in South Iceland in 1967 and 1977 may similarly be the result of magma withdrawal in response to the 1964-1967 Surtsey and 1973 Heimaey eruptions. Annual periodicity seen in the Katla seismicity is explained as the result of the triggering effect of pore pressure in the crust beneath the glacier covering Katla. Several volcanoes exhibit persistent, low-magnitude seismicity. In the Hengill volcano in Southwest Iceland, many events involve a non-double-couple mechanism. The seismicity is interpreted as the result of extensional failure and heat extraction from a cooling magma chamber. Two classes of intraplate earthquakes have been identified in Iceland. One includes events in the lithospheric blockbetween the transform zones. These events are related to crustal extension above the hot spot. The other class includes events on the insular shelf off the east and southeast coasts which are possibly caused by a differential cooling rate in the crust across the shelf edge.