A large seismic network deployed in the Icelandic highlands recorded more than 100,000 earthquakes from 2009 to 2015. We develop a local magnitude scale, appropriate for use in central Iceland, which is similar to the scale used by the Iceland Meteorological Office. Using this large catalogue of earthquakes, we analyze the spatial and temporal changes in seismicity rates and b-values. In microearthquakes recorded from the usually ductile lower crust we find that b-values are high, reflecting the presence of high thermal gradients and low stresses driving seismicity associated with the movement of melt. In contrast, b-values in the upper crust are variable. Low b-values, indicative of a high stress environment, are observed during seismic swarms such as those around Mt. Herðubreið and around Bárðarbunga caldera. A persistently seismically active area around a geothermal area within Askja caldera has a b-value around 1 but has a strong annual cycle of seismicity. We attribute the annual cycle to varying load from the snow cover modulating the seismicity. Seismicity driven by the intrusion of a large dyke has a b-value well above 1, driven by the high pore fluid pressures and thermal gradients around the dyke.