Vegetation-banked terraces with alternating bands of vegetation and gravel are spectacularly developed on the plateau of subantarctic Macquarie Island. Previous work has described two distinct, apparently unrelated types of vegetation-banked terraces on the island, "windward" and "leeward," depending on their exposure to the prevailing westerly winds. Here we have documented aspects of terrace morphology and vegetation. The terraces are dynamic, with mobile gravel, substrate erosion, and vegetation growth all in evidence. By focusing on the processes occurring, we conclude that the "windward" and "leeward" types are actually two related forms that grade from one into the other, depending on hillside aspect. In addition, we describe stone-banked terraces, not previously reported from Macquarie Island. Recent changes on the island resulting in widespread death of the cushion plant Azorella macquariensis may impact on the maintenance of terrace stability in the long term.