Adjust the vertical space between icons

1. Right-click the desktop, and then click Properties.

2. In the Display Properties dialog box, click the Appearance tab. Then, click Advanced.

3. Click the Item list, and then click Icon Spacing (Vertical).

4. In the Size box, decrease the number to move icons closer together, or increase the number to add space between icons. 

(The smaller the number, the less space there will be between the icons. Conversely, the larger the number, the greater the space 

will be between the icons.)

5. Click OK.

6. To change the spacing for your existing desktop icons to the spacing you specified in step 4, right-click your desktop, 

click Arrange Icons By on the shortcut menu, and then click Align to Grid.

7. Next, right-click your desktop, click Arrange Icons By on the shortcut menu, and then click Auto Arrange.