Best small towns in Iceland

Iceland is a breathtakingly beautiful country filled with natural wonders, including glaciers, waterfalls, geysers, and hot springs. While many people visit Reykjavik, the country’s capital city, there are many charming small towns throughout Iceland that are worth visiting. These towns offer a taste of Icelandic culture and history, as well as stunning views of the country’s wild landscapes. From fishing villages to quaint towns with colorful houses, there is something for everyone in these charming small towns.

Whether you’re planning a road trip around the country or just looking for a day trip from Reykjavik, be sure to add these towns to your itinerary.

#1. Vík í Mýrdal

Image source:

The village of Vik Myrdal in Iceland, also known as Vik, comes in first place on our list. One of the best-known small towns in Iceland is located at the base of the enormous Mrdalsjökull Glacier. It is the warmest settlement in Iceland and boasts a select 300 permanent residents.

Reynifjara Black Beach and Reynisdrangar Rocks are close to Vik. Additionally, Katla, Iceland’s most active volcano, is nearby, forcing small communities there to occasionally conduct “volcano drills” in order to be ready for an eruption. Via Ring Road 1, which travels east from Reykjavik, it is simple to reach Vik. On the approach to Vatnajökull National Park, it is one of the first stops that many people make.

Read Also: BEST TIME TO VISIT ICELAND: A Complete Guide

#2. Höfn

Image source: Visit South Iceland

After leaving Vatnajökull National Park, heading east will eventually bring you to one of Iceland’s top cities for lobster. Every July, Höfn holds a lobster festival to honor its reputation as Iceland’s best lobster location. Visit one of Iceland’s small villages, specifically, if you wish to attend a sizable lobster celebration.

One of the communities in Iceland that is nearly entirely encircled by water offers fantastic summer nights. You can see the majestic Vestrahorn Mountain nearby, which is renowned for its impressively steep slopes and stunning peaks. A lesser-known black sand beach nearby likewise gives you the impression that you’re in a fantastical setting. Höfn is located on Ring Road 1 around 450 kilometers east of Reykjavik. One of the many tiny settlements in Iceland that attract travelers seeking adventure.

#3. Húsavík

Image source: Visit North Iceland

Húsavík, a small town on Iceland’s northern coast, is known as the whale-watching capital. The town’s history is intertwined with the ocean and marine life, making whale watching a popular attraction. Visitors can embark on whale-watching tours from May to September, spotting various species of whales like humpback, minke, and blue whales, as well as dolphins and porpoises. Tour guides are knowledgeable and passionate about marine life, providing interesting insights into these creatures’ behavior.

In addition to whale watching, Húsavík offers a charming and quaint atmosphere with classic wooden houses and colorful buildings. Visitors can stroll along the harbor, watch fishing boats, or visit the Húsavík Museum to learn about the town’s history and culture. The town is also home to the GeoSea Geothermal Sea Baths, offering a unique and relaxing experience while taking in stunning ocean and mountain views.

#4. Seydisfjördur

Image source: Wikipedia

Among the settlements in Iceland, this one is a hidden gem. A tranquil tiny settlement in the same-named fjord with a vivid blue church. If you’re not paying attention, Seydisfjordur is very simple to overlook, but it rewards tourists with magnificent ocean views, majestic snow-capped mountains, and breathtaking waterfalls. This is one of the little Icelandic towns that exudes a magical, storybook atmosphere. The many vibrant homes and stunning surroundings can easily persuade you to stay for a longer period of time.

Seydisfjordur is one of the best small towns in Iceland and used to be a U.S.-forces base during WWII. The (nearly) 700 locals get together for a week of celebrations as part of the annual Lunga festival, which also attracts tourists.


#5. Breiðdalsvík

Image source:

Witness The Eastfjords, where the tiny fishing town of Breidalsvk is located, are a less-known region of Iceland. The town’s spectacular surroundings—ancient volcanoes, tall mountains, and nothing but untamed water between here and Norway—make its scattering of homes, eateries, and hotels seem insignificant. With warm, boutique hotels, the Beljandi Brewery, an antique general store, and excursions to see and feel it all, Breidalsvk makes a commitment to give visitors a taste of small-town Icelandic hospitality.

#6. Grimsey Island

Image source: Akureyri

Iceland contains both remote small towns and even more isolated small towns. Only about 100 people live on the 40 km off Iceland’s north coast, Grimsey Island. While the rest of the island is largely uninhabited, everyone resides in the harbor area. Here, as in many other seaside settlements in Iceland, the annual influx of seabirds is the main draw. A million or so seabirds can be found on Grimsey Island, which is accessible from all of the smaller towns in Iceland. Just keep in mind that because this Icelandic community is so far north, the sun practically never sets throughout the summer.

#7. Selfoss

Image source: Visit South Iceland

This is not one of Iceland’s small towns that is easy to miss, nor does it have an especially timid populace. The Olfusá River runs through this town of 6,800 people, which serves as the hub of agriculture, small business, and trade in southern Iceland.

Selfoss is not very close to the waterfall of the same name, despite what the name might imply. Actually, it’s practically on the other side of the country. Although the origin of the name Selfoss is a mystery, it is one of the peculiarities shared by the smaller towns in Iceland. This small town in Iceland lies directly on Ring Road 1 and is only a short drive from Reykjavik, making it a logical stop for your road journey around Iceland.

Read Also: TOP AMAZING WATERFALLS IN ICELAND: 15 Unique Waterfalls

#8. Suðureyri

Best small towns in Iceland
Image source: Visit Westfjords

Suureyri, another picture-perfect fishing village with a dash of adventure, is located on the far northern fingertip of the untamed Sgandafjörur in the Westfjords region. Between the mountain-framed Suureyri and Greenland is a vast ocean. The rustic Fisherman Hotel offers accommodations with communal toilets as well as the best in Icelandic hospitality: a seafood restaurant with fresh-from-the-doorstep dishes. There aren’t many places to stay or eat in this remote hideaway.

#9. Egilsstadir

Best small towns in Iceland
Image source:

Egilsstaðir, known as the “Gateway to the East” in East Iceland, is a charming town with stunning landscapes and natural wonders like the Lagarfljót River, Hallormsstaður forest, and Hengifoss waterfall. The town is home to cultural attractions like the East Iceland Heritage Museum, showcasing the region’s history and culture. Visitors can explore the surrounding area, including Seyðisfjörður, and enjoy outdoor activities like hiking, fishing, and kayaking. Egilsstaðir is also an ideal spot to witness the Northern Lights, as it is far from light pollution.

#10. Isafjordur

Best small towns in Iceland
Image source:

Isafjordur, the adventure capital of the Westfjords, is a charming small town with stunning mountains and fjords. It offers a variety of activities, including hiking, skiing, snowmobiling, and kayaking. The town’s highest mountain, Kirkjufell, provides panoramic views of the fjords and the town. Winter skiing is popular, while water activities like kayaking allow visitors to explore the coastline and wildlife. After a day of adventure, visitors can relax in one of the town’s geothermal pools.

Isafjordur, the oldest residence in Iceland, has around 2,600 residents and is a lively community with year-round festivities. The European Championship of Swamp Soccer is a popular event in the community. Isafjordur is located over 350 kilometers from Ring Road 1, making it an ideal destination for outdoor enthusiasts.

#11. Dalvik

Best small towns in Iceland
Image source:

The place to go for a fantastic skiing trip in the winter is Dalvik, which is included among the best small towns to visit in Iceland. The slopes nearby are designed for both novices and specialists, and there is even a massive, 1,200-meter-long, broad, floodlit slope. One of Iceland’s smaller towns, this one is ideal in the summer for a decent trek or a leisurely stroll along the black beach while taking in the diverse birds.

If you’re staying in Akureyri and feeling adventurous, Dalvik is a wonderful alternative because it can be reached from there in just 35 minutes.

#12. Akureyri

Akureyri, the capital of northern Iceland, is known for its unique architecture, blending traditional Icelandic design with modern elements. The town offers a picturesque streetscape and stunning snow-capped mountains, while the Akureyri Church, a stunning Lutheran church, dominates the skyline. The Akureyri Art Museum showcases local artists’ work and showcases the town’s vibrant cultural scene. For adventurers, the nearby Goðafoss waterfall is a spectacular sight. Akureyri is also a great starting point for exploring northern Iceland’s rugged natural beauty, including Lake Mývatn and Dimmuborgir lava fields.

#13. Siglufjörur

Credit: TripAdvisor

Siglufjörur, a hidden gem in northern Iceland, is one of the picturesque towns nestled within a narrow fjord surrounded by snow-capped mountains. With a rich history, Siglufjörur was once the center of Iceland’s herring fishing industry. Today, the town is known for its colorful houses, charming harbor, and friendly locals. The Herring Era Museum, housed in three buildings, tells the story of Iceland’s herring boom in the early 20th century.

The museum features an old fish processing plant, providing visitors with a glimpse into life during the herring boom. Siglufjörur offers numerous outdoor activities, including skiing and snowboarding in winter, hiking and fishing in the nearby rivers and lakes, and whale-watching tours in the harbor.

Read Also: Best Small Towns In California

#14. Stykkishólmur

Stykkishólmur, a charming small town on the Snaefellsnes Peninsula, is a seaside paradise with a beautiful harbor and a strong fishing heritage. The town is known for its unique architecture, featuring colorful houses with corrugated iron roofs. Visitors can enjoy a walk and enjoy the lively atmosphere. Súgandisey Island, accessible by foot or boat, offers stunning views of the town and the surrounding landscape.

The town also has a strong connection to Icelandic sagas, with a museum dedicated to Snorri Sturluson, a famous author who lived in the area during the 13th century. The museum, housed in a beautiful stone building, features exhibits on Viking history and Icelandic folklore.

#15. Grundarfjörður

Grundarfjörður, a charming town on the Snaefellsnes Peninsula in western Iceland, is a hidden gem with stunning mountains, fjords, and waterfalls. The town is known for its iconic Kirkjufell Mountain, a triangular-shaped mountain that has become an icon of Iceland’s natural beauty. It is also known as the “Arrowhead Mountain” from Game of Thrones. In addition to Kirkjufell, Grundarfjörður boasts a vibrant fishing industry, offering fresh seafood and a beautiful harbor for strolling.

Hiking enthusiasts can enjoy breathtaking views of the town and surrounding landscape, with the top of Kirkjufell offering a panoramic view of the Snaefellsnes Peninsula.

#16. Hveragerði

Hveragerði, a small town in southern Iceland, is known for its geothermal activity and is often called the “hot spring capital” of Iceland. The town’s thin Earth’s crust causes hot water to bubble up from the ground, leading to the development of geothermal greenhouses for growing fruits and vegetables year-round. One popular attraction is the Reykjadalur Valley, known for its hot river and stunning natural beauty. Hveragerði also offers hiking trails and a geothermal park, where visitors can learn about the town’s geothermal history and enjoy a relaxing stroll.

What Is the Biggest Problem in Iceland?

Although Iceland is famous for its unspoiled natural beauty, there are areas where care must be exercised. One of the most serious environmental problems in Iceland is the loss of vegetation by wind erosion. The Icelandic Soil Conservation Service has been fighting soil erosion since 1907, with considerable success.

What Is the Best City to Live in Iceland?

Some of the best places to live in Iceland are the capital, Reykjavik; Akureyri; Hafnarfjörur; Seyisfjörur; Kópavogur; and Hsavk.

Is English Spoken in Iceland?

In Iceland, English is taught as a second language, and practically all Icelanders are fluent English speakers. Furthermore, the majority of Icelanders are multilingual, speaking languages like Danish, German, Spanish, and French, and they enjoy the chance to converse in different tongues.

What Is Iceland’s Famous Food?

Cod, salmon, and haddock are the most common, along with langoustines, a favorite for most local gourmands. Lobster is also one of the best things Icelanders eat. The small Icelandic langoustine is incredibly tender and delicious and an expensive favorite for many.

Is it Always Cold in Iceland?

The common notion is that Icelandic weather is usually freezing, making it impossible to simply stand outside. The greatest summer days might have temperatures as high as 26 degrees Celsius. However, the average summertime temperature is just about 13 degrees Celsius.

What Are the Disadvantages of Living in Iceland?

Cons of living in Iceland

  • Long winters: Winters are really long in Iceland and you can even experience them in the summertime if you are not lucky.
  • Long nights in wintertime.
  • Iceland is an isolated island.
  • High prices
  • Weather
  • Difficult local language.
  • Poor quality of vegetables, berries, and fruits.


When deciding which small town in Iceland is best, there are several things to take into account. There are many factors to consider, from the scenery and natural beauty to the services and activities offered. However, we think that each of the places on this list has something unique to offer that makes it perfect for a tranquil and memorable vacation in Iceland. So be sure to check out one of these incredible tiny towns, whether you’re looking for a location to admire the Northern Lights or get a taste of Icelandic culture.

Related Posts

FAQs on Small Towns in Iceland

What is the safest city in Iceland?

Reykjavík. The charming city of Reykjavik is the capital of Iceland.

What is the cost of living in Iceland?

A single person estimated monthly costs are 1,087$ (156,033kr) without rent. The cost of living in Iceland is, on average, 15.97% higher than in the US. Rent in Iceland is, on average, 23.85% lower than in the US.

Is healthcare in Iceland free?

State healthcare in Iceland is not completely free. The state covers the healthcare costs (through the Icelandic Health Insurance fund) and through patient contributions. Patient contributions are capped each month.