Summary Aquifers are poroelastic bodies that respond to strain by changes in pore pressure. Crustal deformation due to volcanic processes induces pore pressure variations that are mirrored in well water levels. Here, we investigate water level changes in the Belham valley on Montserrat over the course of 2 yr (2004–2006). Using finite element analysis, we simulate crustal deformation due to different volcanic strain sources and the dynamic poroelastic aquifer response. While some additional hydrological drivers cannot be excluded, we suggest that a poroelastic strain response of the aquifer system in the Belham valley is a possible explanation for the observed water level changes. According to our simulations, the shallow Belham aquifer responds to a steadily increasing sediment load due to repeated lahar sedimentation in the valley with rising aquifer pressures. A wholesale dome collapse in May 2006 on the other hand induced dilatational strain and thereby a short-term water level drop in a deeper-seated aquifer, which caused groundwater leakage from the Belham aquifer and thereby induced a delayed water level fall in the wells. The system thus responded to both gradual and rapid transient strain associated with the eruption of Soufrière Hills Volcano (Montserrat). This case study gives field evidence for theoretical predictions on volcanic drivers behind hydrological transients, demonstrating the potential of hydrological data for volcano monitoring. Interrogation of such data can provide valuable constraints on stress evolution in volcanic systems and therefore complement other monitoring systems. The presented models and inferred results are conceptually applicable to volcanic areas worldwide.