Abstract Multibeam bathymetric and high resolution seismic reflection data (Chirp) have been used to illuminate the structural framework and tectonic evolution of the 300 km2 Skjalfandadjup Basin, one of three large rift basins within the Tjornes Fracture Zone, a complex transform zone offshore Northern Iceland. The Skjalfandadjup Basin together with the Nafir seamounts, form the nascent Nafir–Skjalfandadjup volcanic system of the oblique Grimsey Volcanic Zone. The Skjalfandadjup Basin is made up of normal faults with maximum displacement of 50–60 m and a dominant strike of N10–20°W. Correlation of Chirp data with tephrochronology from sediment core MD99-2275 provided constraints on tectonic movements along individual faults from Late-glacial time throughout Holocene. Maximum vertical displacement is observed on three listric normal faults marking the eastern boundary of the main basin. Postglacial tectonic activity commenced as early as 14–15 kyr BP, followed by three major rifting episodes prior to 10 kyr BP and three smaller rifting episodes during the last 4.2 kyr. The 10–12 kyr period of enhanced tectonic activity was accompanied by eruptions within the Tjornes Fracture Zone. Isostatic rebound following rapid deglaciation caused rifting with significant vertical displacement on normal faults offshore N-Iceland.