Following volcano deflation since 1989, the deformation pattern in Krafla caldera, North Iceland, changed in 2018. Geodetic measurements reveal a difference in surface velocity fields for 2015–2018 and 2018–2020 periods, reflecting a change in the deformation pattern. The difference velocity field broadly fits deformation caused by a spherical pressure source within a uniform elastic half-space, with a volume change of 2.6–3.8 × 105 m3/yr and centre depth of 2.1–2.5 km, which is close to the brittle-ductile boundary in the area, at a depth of 1.8 to 2.2 km. Potential processes causing the deformation change are evaluated: magmatic processes such as magma inflow or accumulation of volcanic gas, changes in the geothermal area because of change in geothermal production, or a combination of these. In particular, we evaluate if the change in deformation may relate to about 0.1 MPa/yr pressure increase in the geothermal system as measurements in monitoring well KG-10 indicate, eventually due to changes in the geothermal exploitation strategy at the Krafla power plant. Modelling shows that inferred volume change may be due to a spherical source with 1.4 km radius with 0.1 MPa/yr pressure change if the surrounding crust has a Young's modulus E of about 7 GPa. However, the average regional Young's modulus for the upper crust in Iceland has been estimated to be 30 GPa. We use the Finite Element Method (FEM) to assess the influence on the displacement due to the presence of a local crustal volume 5 × 5 × 4 km (horizontal dimensions × depth), which envelops the source (within the Krafla caldera), with E = 7 GPa in the central area and 30 GPa in the far field, in a three-dimensional model. Such a model can reproduce significant features of the observed deformation. There are no changes in seismicity in 2018. In late 2019, the earthquake rate increases following a slight decrease over few months. The seismic moment release is relatively steady until the end of 2019, when the rate increases and is relatively constant in 2020. Gravity measurements in late 2019, when compared to limited measurements in 2018, are inconclusive regarding the nature of the deformation, but useful for further monitoring. No noticeable changes have been observed in the chemical composition of fumarole discharge in the Krafla field that relate to new intrusions.