Nisyros is a volcanic island in the south-east of the Aegean volcanic arc. Over the period 1995–1998, the volcano exhibited intense seismic activity without eruption. Production and analysis of satellite radar interferograms, spanning period 1995–2000, showed continuous inflation from 1995 until May 1998 and deflation from mid-1998 to 2000, with the same deformation centre situated at the north-west part of the volcano. Assuming the crust to be an elastic homogenous medium, point source modelling of the deformation field indicates the source of deformation to be located at five kilometres depth beneath the north-west edge of the island. Recorded seismicity trend patterns suggest magma intrusion at depth as the source of the inflation sequence. The recorded migration of hypocentres indicates a probable fluid transport affecting the shallow aquifers resulting in the volcano’s deflation.