The river's primary source is two subglacial "cauldrons" beneath Skaftájökull, part of the Vatnajökull glacier in the interior of Iceland.

[2][3] It also receives spring-fed water from Langisjór, a lake a short distance to the west from which a tributary called the Útfall runs into the Skaftá.

[4][5] West of Skaftárdalur, a farm named for the river valley, the Skaftá runs over a lava field in many channels, which recombine into three for the remainder of its course to the Atlantic: the Eldvatn or Ása-Eldvatn combines with the River Kúðafljót; the Ásakvísl or Árkvísla flows under a sand-covered lava field and has been affected by road construction; the third, easternmost branch, which flows near Kirkjubæjarklaustur, retains the name Skaftá[5] but has extremely low water levels when temperatures are lowest.

[5] Beginning on June 8, 1783, the multi-year eruption of the volcanic system including Grímsvötn and Þórðarhyrna (sometimes referred to in Icelandic as the Skaftáreldur, Skaftá Fires)[6] filled the river valley with lava, including a gorge thought to have been 200 metres (660 ft) deep,[7] diverting its flow into the multiple shallow channels that now characterize its course.

As a result it is subject to jökulhlaups (glacial outburst floods), which occur every one to two years.