The Newport-Inglewood fault zone (NIFZ) displays interferometric synthetic aperture radar (SAR) phase features along most of its length having amplitudes of up to 60 mm. However, interpretation in terms of right-lateral, shallow slip along the fault fails to match the range of geologic estimates of slip. Recently, Bawden et al.  proposed that these phase features, as well as a broader deformation pattern in the Los Angeles basin, are due to vertical motion related to annual variations in the elevation of the water table. We confirm this hypothesis through the analysis of a longer span of data consisting of 26 SAR images collected by the ERS-1 and ERS-2 spacecraft between June 1992 and June 2000. Moreover, we use continuous GPS measurements from 1995 to the present to establish the amplitude and phase of the vertical deformation. The Los Angeles basin becomes most inflated one quarter of the way through the year, which is consistent with water table measurements as well as with the end of the rainy season when the aquifer should be at a maximum. The spatial pattern of the amplitude of the annual signal derived from continuous GPS measurements is consistent with the shape of the interferometric fringes. GPS sites both near the NIFZ and in a 20 by 40 km zone within the basin also show significant N-S annual variations that may be related to the differential expansion across the fault. Since these horizontal signals have peak-to-trough amplitudes of 6 mm, they mask the smaller tectonic signals and need to be taken into account when interpreting GPS time series of site position. Moreover, since the groundwater signal appears to have a long-term vertical trend which varies in sign depending on location, it will be difficult to distinguish interseismic tectonic slip along the NIFZ and within the affected areas in the basin.