Two earthquake swarms, comprising 88 and 2833 locatable events, occurred beneath Iliamna Volcano, Alaska, in May and August of 1996. Swarm earthquakes ranged in magnitude from -0.9 to 3.3. Increases in SO2 and CO2 emissions detected during the fall of 1996 were coincident with the second swarm. No other physical changes were observed in or around the volcano during this time period. No eruption occurred, and seismicity and measured gas emissions have remained at background levels since mid-1997. Earthquake hypocenters recorded during the swarms form a cluster in a previously aseismic volume of crust located to the south of Iliamna's summit at a depth of -1 to 4 km below sea level. This cluster is elongated to the NNW-SSE, parallel to the trend of the summit and southern vents at Iliamna and to the regional axis of maximum compressive stress determined through inversion of fault-plane solutions for regional earthquakes. Fault-plane solutions calculated for 24 swarm earthquakes located at the top of the new cluster suggest a heterogeneous stress field acting during the second swarm, characterized by normal faulting and strike-slip faulting with p-axes parallel to the axis of regional maximum compressive stress. The increase in earthquake rates, the appearance of a new seismic volume, and the elevated gas emissions at Iliamna Volcano indicate that new magma intruded beneath the volcano in 1996. The elongation of the 1996-1997 earthquake cluster parallel to the direction of regional maximum compressive stress and the accelerated occurrence of both normal and strike-slip faulting in a small volume of crust at the top of the new seismic volume may be explained by the emplacement and inflation of a subvertical planar dike beneath the summit of Iliamna and its southern satellite vents. ?? 2003 Elsevier B.V. All rights reserved.