This paper investigates the seismicity and rheology of the North-Sulawesi subduction zone. Body-wave modeling is used to estimate focal mechanisms and centroid depths of moderate magnitude (M5–M6.5) earthquakes on the North Sulawesi megathrust and surrounding region. The slip vectors of megathrust earthquakes radiate outward from Sulawesi, indicating motion that is incompatible with the relative motion of two rigid plates. Instead, the observed deformation implies lateral spreading of high topography, controlled by gravitational potential energy contrasts. This finding suggests that the observed deformation of Sulawesi results from stresses transmitted through the lithosphere, rather than basal tractions due to circulation in the mantle. Our modeling of the force balance on the megathrust shows that the subduction megathrust is weak, with an average shear stress of ∼13 MPa and an effective coefficient of friction of 0.03. Elsewhere in Sulawesi, slip vectors of other earthquakes suggest similar potential-energy-driven deformation is present, but at significantly slower rates. Our results show the importance of lateral rheology contrasts in determining deformation rate, and hence seismic hazard, in response to a given driving force.