We installed a dense, amphibious, temporary seismological network to study the seismicity and structure of the seismogenic zone in southern Chile between 37° and 39°S, the nucleation area of the great 1960 Chile earthquake. 213 local earthquakes with 14.754 onset times were used for a simultaneous inversion for the 1-D velocity model and precise earthquake locations. Relocated artificial shots suggest an accuracy of the earthquake hypocenter of about 1 km (horizontally) and 500 m (vertically). Crustal events along trench-parallel and transverse, deep-reaching faults reflect the interseismic transpressional deformation of the forearc crust due to the subduction of the Nazca plate. The transverse faults seems to accomplish differential lateral stresses between subduction zone segments. Many events situated in an internally structured, planar seismicity patch at 20 to 40 km depth near the coast indicate a stress concentration at the plate's interface at 38°S which might in part be induced by the fragmented forearc structure.