We report on high-sensitivity EVN and MERLIN observations of the OH maser emission and continuum in the luminous infrared galaxy III Zw 35. Earlier VLBI observations have shown two compact maser clumps containing 40%–50% of the single-dish flux. In addition to these compact masers, we detect more diffuse maser emission which lies in a clear ring structure of radius r ∼ 22 pc. The ring appears inclined to the line of sight and the compact masers occur at the tangent points. This structure suggests that the compact and diffuse masers appear different because of geometrical effects and not pumping or other physical conditions. Our observations reveal a velocity gradient along the western side of the disc which indicates rotation. The 18 cm continuum radiation is resolved into a few unresolved sources, plus more diffuse emission and is broadly consistent with emission originating in a starburst.