Melting of the proto-Iceland Plume produced the intra-plate lavas of the Faroe Islands. The lava series of the Malinstíndur Formation contains picrite flows which have accumulated up to 50% olivine pheno- and antecrysts. Whole-rocks, minerals and olivine-hosted melt inclusions (MI) from this formation, in addition to other Faroe Island lavas, were analysed for their major-trace element and Sr isotope composition. In comparison to other lavas from the Faroe Islands, the depleted incompatible trace-element composition of the population of inclusions investigated here is equivalent to that of its host-lava, and thus minorly influenced by post-entrapment crystallisation (PEC). High-precision Sr isotope ratios of silicate melt inclusions in olivine, binned by their Fo contents (Fo93–78, in 1 mol% Fo bins), reveal large variations in 87Sr/86Sr within a single lava flow. Both the 87Sr/86Sr and their variability increase with decreasing Fo content, suggesting progressive incorporation of different components during magma evolution, that is, concurrent mixing and crystallisation. The total variation in Sr isotope ratios in the MI population covers about 60% of the variation recorded in the erupted lavas of the entire Faroe Island archipelago, but is slightly biased towards more radiogenic 87Sr/86Sr. The variation of Sr isotope ratios and incompatible trace element concentrations is best explained by mixing-in of melts with different trace element and isotope compositions. Clinopyroxene barometry indicates that mixing of melts likely occurred at pressures higher than 0.6 GPa, in sub-MOHO magma conduits and sills. Hence the chemical and isotopic variability of the melt inclusions is influenced by magmatic processes during melt evolution, which must therefore also influence how source heterogeneity is reflected in the composition of the erupted basalts.