Normal-fault slip of the boundary faults of a graben is commonly attributed to dike-induced stresses. Here, however, we report for the first time clear field evidence of a large dike-induced reverse-fault slip on a fault associated with a volcano-tectonic graben. The measured reverse faulting of at least 5 m occurs in the Holocene rift zone of northern Iceland. The reverse slip has apparently occurred on an existing normal fault as a result of over pressure of a nearby 6–13-m-thick 8 ka feeder dike. A numerical model of the dike-fault interaction supports our interpretation. The results indicate that dikes, particularly potential feeder dikes, may cause large reverse slips on nearby normal faults. This conclusion should improve the general understanding of geodetic deformation during volcanic unrest periods and may help forecast dike-fed eruptions.