The 9 month long 2011-2012 eruption of Cordon Caulle (Southern Andes, Chile) is the best instrumentally recorded rhyolitic eruption to date and the first time that the effusion of a rhyolitic flow has been observed in detail. We use Interferometric Synthetic Aperture Radar (InSAR), with time-lapse DEMs and numerical models to study the dynamics of coupled magma reservoir deflation and lava effusion. InSAR recorded ~2.2-2.5 m of deflation after the first three days of the eruption, which can be modeled using a spheroidal magma reservoir at a depth of ∼5 km, ∼20 km long, and with a pressure drop of ~20-30 MPa. The source is elongated in the NW-SE direction and its large dimensions imply a large plumbing system spanning neighboring volcanoes and active throughout the eruption, with a slight change halfway through the effusive phase. TanDEM-X DEMs record the extrusion of both the rhyolitic lava flow and the intrusion of a shallow laccolith around the eruptive vent, with a total volume of ~1.2 km3 DRE. The laccolith was emplaced during the first month of the eruption, during both the eruption explosive and effusive stages. Both the reservoir pressure drop and the extruded volume time series follow quasi-exponential trends, and can be explained by a model that couples the reservoir pres- sure decrease, time- and pressured ependent variations in the magma properties inside of the reservoir, and conduit flow. This model predicts both the temporal evolution and amplitude of both time series, and a magma compressibility of ∼10^−10 Pa−1, half the compressibility of the magma of the sub-Plinian explosive phase. Further, we estimate that the reservoir contained 1-3 wt.% dissolved H2O at the onset of lava effusion, with no exsolved CO2 and H2O in the reservoir throughout the eruption. This is in accord with a magma that was significantly degassed after the explosive phase. These remaining volatiles might have been responsible for magma fragmentation, consistent with the hybrid explosive and effusive style observed during the waning of the eruption.