At Taupo volcano (New Zealand), a major young caldera system is superposed on the Taupo Fault Belt, a zone of Late Quaternary extensional normal faulting accompanying rifting. Palaeoshorelines formed at 26.5 and 1.8 ka around intracaldera Lake Taupo highlight contrasts between short-term vertical deformation patterns detected by geodetic and lake-levelling surveys, and longer-term trends recorded by the warped and offset palaeoshoreline levels. Rifting is apparently occurring without the accumulation of long-term vertical offsets and net subsidence on adjacent normal faults of the Taupo Fault Belt. Geomorphic and stratigraphic data indicate that much vertical deformation is episodic and closely related to major volcanic eruptions: at other times, compensation is occurring, possibly by magma accumulation in the crust. However, periods of caldera unrest at Taupo may reflect regional rifting processes made manifest by the presence of the lake, rather than magmatic processes alone.