Iceland towns are always a pleasure to visit. These charming places make ideal bases for overnight stays while you’re on the road and fascinating pit stops, whether you’re in the mood for a quirky museum or need to refuel with a plate of waffles and a coffee. There’s nothing wrong with Reykjavík or Akureyri, of course, but sometimes it’s nice to stick to somewhere smaller.
Scattered across the country, these are our picks for the best towns in Iceland. Large enough to offer something more than a collection of houses yet compact enough to explore on foot, they’re worth adding to your self-drive itinerary. Point your car in the direction of these small towns in Iceland and allow yourself plenty of time to explore.
Easily one of the best towns in Iceland, northerly Húsavík is the undisputed best place for whale watching in Iceland.
Traditional oak-hulled boats and high-speed RIBs depart regularly from the town’s pretty harbor. They head out into Skjálfandi Bay in search of wildlife. There are regular sightings of humpbacks, minke whales, white-beaked dolphins and harbor porpoises.
On land, Húsavík is just as captivating as it is from the water.
The town’s Whale Museum is a must, not least for the 22-meter-long skeleton of a blue whale that’s inside. Nearby, the Swiss-inspired church that stands close to the waterfront has been there for over a century.
On the edge of town, GeoSea geothermal baths perched on a headland overlooking the bay. This is the perfect spot to end your day: come here, steep in the hot pool and brush your day away watching the sunset.
A scenic route over Fjarðarheiði mountain pass connects the Ring Road to East Iceland’s prettiest town. The port of Seyðisfjörður has become popular with Instagrammers for the rainbow path that leads along Norðurgata to the town’s church. Time your visit for spring when it’s freshened up each year and you might just be handed a paintbrush.
Seyðisfjörður’s fjord-side setting is as dramatic as it is beautiful. Make the time to take a walk along the River Fjarðará to Gufufoss, the town’s largest waterfall. Sporty types can play a round of golf in summer or ski in winter. It’s also a treat to simply grab a table at one of the waterfront cafés and soak up the view.
Ísafjörður is the capital of the West Fjords. It’s a popular base for trips over to Hornstrandir Nature Reserve, but if you’re keen on architecture or history, it’s worth hanging around.
There is a cluster of wooden buildings which date from the 18th century. One of them, Turnhús houses the Westfjords Heritage Museum, which focuses on the area’s maritime history.
The Westfjords Heritage Museum isn’t the only museum in Ísafjörður. The Ásgeir S. Sigurðsson Accordion Museum exhibits more than 220 of these instruments, the oldest of which dates from 1830. Meanwhile, the contents of the Museum of Everyday Life are much more modern, but the space manages to make even the mundane interesting.
Vestmannaeyjabær huddles around a natural harbor. Boat trips depart from there to tour the caves and cliffs where myriad seabirds make their home. During the summer, you’ll get a closer look at the puffins if you drive out to the Stórhöfðaviti bird hide four miles south. Must-sees in town include the beluga whale sanctuary and a museum devoted to the 1973 eruption.
To reach Vestmannaeyjabær you’ll need to drive your vehicle onto the car ferry, as it is the main town on the island of Heimaey in the Westman Islands. Many of the island’s most popular visitor attractions are within walking distance of the ferry, but it’s worth having your car with you to reach the far side of the island, as the hill’s a bit steep.
Siglufjörður made its money on the herring industry until, one day, the fish disappeared. In the 1950s, there were as many as 500 boats coming and going from its busy docks and numerous processing factories. In the mid 1960s, the boom came to an abrupt end and many people who lost their jobs simply moved away.
The red Róaldsbrakki building houses are part of a fascinating museum that explains what happened to the fishing industry. The colorful façade of the Grána fish meal and oil factory next door and the boathouse are also interesting to visit. Fans of the TV series Trapped will recognize the hotel opposite (and should check our Trapped Itinerary in Iceland).
Travel by ferry from the Westfjords to Snæfellsnes and you’ll disembark in pretty Stykkishólmur. Let’s see what’s to see and do here!
A collection of wooden buildings is just a stone’s throw away from the port. Start with the Norwegian House, constructed in 1832 using timber shipped over from Norway. It was the first two-story home in the country and is now open to the public as a museum.
Take a stroll along Aðalgata, a street with several historic buildings that are definitely worth checking out. Among them, the old church built in 1878 and Hotel Egilsen, an easy-to-spot red building that dates from 1867, making it the second-oldest house in this small Iceland town.
Here, the most unusual attraction is the Library of Water, a collection of 24 glass columns containing melted ice collected from glaciers across the country.
Flateyri, in the Westfjords is off the beaten track but worth a detour. It has one of the prettiest locations in the area, standing beside Önundarfjörður.
This small town has been rebuilt after a 1995 avalanche, a tragedy that destroyed many houses and took the lives of 20 people. Visit the Nonsense Museum, which houses an eclectic range of items from sachets of sugar to models of aeroplanes.
Don’t leave Flateyri without checking out Bræðurnir Eyjólfsson, Iceland’s oldest bookstore. As well as a plentiful stock of reading material, there’s a wall of ledgers preserved from the store’s early days of trading and the meticulously preserved apartment of the shop’s first owner.
Bakkagerði is a tiny place at the end of Borgarfjörður Eystri, a fjord in East Iceland. Though there’s not an endless supply of things to do, the surrounding area is good for nature hikes and the nearby puffin colony is worth a visit in summer.
The town itself has a certain charm, not least the turf house called Lindarbakki which is still occupied as a summer home. Turf houses are traditional Icelandic, this type of architecture derives directly from the antique Viking houses.
The inhabitants of Bakkagerði share their town with the elves: the name derives from a rock named Álfaborg. Their residents say that Elf Rock is the home of the Queen of the Elves.
The presence of these tiny creatures may be the reason the church’s orientation is different to others in Iceland, facing the fjord rather than being aligned east-west as is more common. Inside, a painting by renowned artist Johannes Kjarval depicts Jesus on the elf hill.
Vík í Mýrdal
This attractive small town is the most southerly in the country. The drive in to Vík í Mýrdal is extraordinary: you climb up and over a low mountain pass with Mýrdalsjökull glacier looming large above you and drop quickly down to sea level.
The moment you are in the center of town you’ll find Skaftfellingur Museum which focuses on the area’s maritime history – there’s a recovered shipwreck to admire inside.
Up on the hill overlooking Vík, you’ll see its church.
As well as being a place of worship, it also functions as a potential evacuation center. Should a volcanic eruption beneath the glacier trigger a flood, this will be the safest place to congregate until help arrives.
The view from the church towards Vik’s black sand beach and its distinctive sea stacks is a remarkable one. It is a dramatic scene: lava rock formations tower over a roaring sea.
In our opinion, no road trip is complete without a stop in at least a couple of these recommended best towns along the way. As you’ve seen, they have bags of character and history.
Iceland’s beautiful small towns
Whether you are a passionate fan of nature and birds or keen on architecture and history, these picturesque small towns in Iceland offer an option for every visitor. There’s no excuse not to get out and stretch your legs as you discover more about them. All you need to do is book your rental car in Iceland and away you go. So, which of Iceland’s towns will you visit first?