The three-dimensional P-wave velocity structure beneath the Katmai group of volcanoes is determined by inversion of more than 10,000 rays from over 1000 earthquakes recorded on a local 18 station short-period network between September 1996 and May 2001. The inversion is well constrained from sea level to about 6 km below sea level and encompasses all of the Katmai volcanoes; Martin, Mageik, Trident, Griggs, Novarupta, Snowy, and Katmai caldera. The inversion reduced the average RMS travel-time error from 0.22 s for locations from the standard one-dimensional model to 0.13 s for the best three-dimensional model. The final model, from the 6th inversion step, reveals a prominent low velocity zone (3.6–5.0 km/s) centered at Katmai Pass and extending from Mageik to Trident volcanoes. The anomaly has values about 20–25% slower than velocities outboard of the region (5.0–6.5 km/s). Moderately low velocities (4.5–6.0 km/s) are observed along the volcanic axis between Martin and Katmai Caldera. Griggs volcano, located about 10 km behind (northwest of) the volcanic axis, has unremarkable velocities (5.0–5.7 km/s) compared to non-volcanic regions. The highest velocities are observed between Snowy and Griggs volcanoes (5.5–6.5 km/s). Relocated hypocenters for the best 3-D model are shifted significantly relative to the standard model with clusters of seismicity at Martin volcano shifting systematically deeper by about 1 km to depths of 0 to 4 km below sea level. Hypocenters for the Katmai Caldera are more tightly clustered, relocating beneath the 1912 scarp walls. The relocated hypocenters allow us to compare spatial frequency-size distributions ( b-values) using one-dimensional and three-dimensional models. We find that the distribution of b is significantly changed for Martin volcano, which was characterized by variable values (0.8 < b < 2.0) with standard locations and more uniform values (0.8 < b < 1.2) after relocation. Other seismic clusters at Mageik (1.2 < b < 2.2), Trident (0.5 < b < 1.5) and Katmai Caldera (0.8 < b < 1.8) had stable b-values indicating the robustness of the observations. The strong high b-value region at Mageik volcano is mainly associated with an earthquake swarm in October, 1996 that possibly indicates a shallow intrusion or influx of gas. The new velocity and spatial b-value results, in conjunction with prior gravity (Bouguer anomalies up to − 40 mgal) and interferometry (several cm uplift) data, provide strong evidence in favor of partially molten rock at shallow depths beneath the Mageik–Katmai–Novarupta region. Moderately low velocities beneath Martin and Katmai suggest that old, mostly solidified intrusions exist beneath these volcanoes. Higher relative velocities beneath the Griggs and Snowy vents suggest that no magma is resident in the shallow crust beneath these volcanoes.