The geological deformation of Iceland is the way that the rocks of the island of Iceland are changing due to tectonic forces. The geological deformation help to explain the location of earthquakes, volcanoes, fissures, and the shape of the island. Iceland is the largest landmass (102,775 km²; 39,682 sq mi) situated on an oceanic ridge. It is an elevated plateau of the sea floor, situated at the crossing of the Mid-Atlantic Ridge and the Greenland-Iceland-Scotland ridge. It lies along an oceanic divergent plate boundary: the western part of Iceland sits on the North American Plate and the eastern part sits on the Eurasian Plate. The Reykjanes Ridge of the Mid-Atlantic ridge system in this region crosses the island from southwest and connects to the Kolbeinsey Ridge in the northeast.

Iceland is geologically young: all rocks there were formed within the last 25 million years. It started forming in the Early Miocene sub-epoch, but the oldest rocks found at the surface of Iceland are from the Middle Miocene sub-epoch. Nearly half of Iceland was formed from a slow spreading period from 9 to 20 million years ago (Ma).

The geological structures and geomorphology of Iceland are strongly influenced by the spreading plate boundary and the Iceland hotspot. Although some have questioned if a hotspot is necessary to explain the observed deformations of Iceland, this is currently felt to best explain observations of rock composition and age obtained by modern techniques. The buoyancy of the deep-seated mantle plume underneath has uplifted the Iceland basalt plateau to as high as 3,000 m (9,800 ft). The crust over the plume is also up to 40 km (25 mi) thick, which is much thicker than elsewhere in Iceland and a contrast to the minimum thickness of 8 km (5.0 mi), which is a thickness more typical of oceanic divergent plate boundaries. The central part of Iceland is still lifting, but the current rate of crustal lifting of 3 cm/year (1.2 in/year) is mainly explained by glacial isostatic adjustment in response to the retreat of ice since 1890, which has removed much weight from the thick ice sheet. The hotspot also produces high volcanic activity on the plate boundary.

There are two major geologic and topographic structural trends in Iceland. One strikes north-east in southern Iceland and strikes nearly north in northern Iceland. The other one strikes approximately west to north-west. Altogether they produce a zigzag pattern. The pattern is shown by faults, volcanic fissures, valleys, dikes, volcanoes, grabens, and fault scarps.

The geological deformation of Iceland is mainly caused by the active spreading of the mid-Atlantic ridge. The Reykjanes Ridge south of Iceland comes ashore at Reykjanes, where all of the extension of the northern Reykjanes ridge (NRR) is accommodated in the Reykjanes Peninsula. At Reykjavík, towards the northern end of this peninsula, the relative movement of the North American Plate away from the Eurasian Plate can be modelled as 1.883 cm/year (0.741 in/year), but less than 60% of this divergence is accommodated by tectonic structures just to the immediate east of Reykjavík, with most of the rest being absorbed by tectonic structures in the south-east of Iceland. This is as other extensional cracks and transform faults are found perpendicular to the spreading direction. The transform-fault zones are also known as fracture zones. These fracture zones allow large volumes of lava to be erupted. The most productive volcanic region is located under the Vatnajökull glacier in the mid-east of Iceland, where all of about 1.853 cm/year (0.730 in/year) of extension is being accommodated near a plate triple junction. On the surface of Iceland, linear volcanic fissures formed along the rifts and appear in a swarm-like pattern. They are connected by fracture zones, forming the volcanic zones.

The Kolbeinsey Ridge assumes 100% of the divergence rate of 1.834 cm/year (0.722 in/year) measured near Akureyri on the north coast of Iceland, which compared to the vector in the south-east of Iceland is less and slightly more pointing to the north. Accordingly, in between, Iceland is being twisted slightly, and the tectonic structures are diverging more at the south than at the north.

Deformation has also been influenced by the context of glaciation and its retreat from around 3.3 million years ago. The historic subglacial volcanic eruptions result on the exposure, after the recent ice retreat, of distinctive flat-topped landforms such as tuyas, and rebound effects need to be accounted for in the seismic interpretations outlined below.

Crustal movements have created two plate-boundary deformation zones between the major plates, the North American Plate and the Eurasian Plate.