New field work and petrological investigations of the largest gabbro outcrop in Iceland, the Hvalnesfjall gabbro of the 6-7 Ma Austurhorn intrusive complex, have established a stratigraphic sequence exceeding 800 m composed of at least 8 macrorhythmic units. The bases of the macrorhythmic units are composed of 2-10 m thick melanocratic layers rich in clinopyroxene and sometimes olivine, relative to the thicker overlying leucocratic oxide gabbros. While the overall compositional variation is limited (Mg# clinopyroxene 72-84; An% plagioclase 56-85), the melanocratic bases display spikes in Mg# and Cr₂O₃ of clinopyroxene and magnetite indicative of magma replenishment. Some macrorhythmic units show mineral trends indicative of up-section fractional crystallisation over up to 100 m, whereas others show little variation. Two populations of plagioclase crystals (large, An-rich and small, less An-rich) indicate that the recharge magma carried plagioclase xenocrysts (high An-type). The lack of evolved gabbros suggests formation in a dynamic magma chamber with frequent recharge, tapping and fractionation. Modelling of these compositional trends shows that the parent magma was similar to known transitional olivine basalts from Iceland that had undergone about 20% crystallisation of olivine, plagioclase and clinopyroxene and that the macrorhythmic units formed from thin magma layers not exceeding 200-300 m. Such a "mushy" magma chamber is akin to volcanic plumbing systems in settings of high magma supply rate including the mid-ocean ridges and present-day magma chambers over the Iceland mantle plume. The Austurhorn central volcano likely formed in an off-rift flank zone proximal to the Iceland mantle plume during a major rift relocation.