Reykjavík (Icelandic pronunciation: [ˈreiːcaˌviːk] ( listen)) is the capital and largest city in Iceland.

Its latitude, at 64°08' N, makes it the world's northernmost capital of a sovereign state. It is located in southwestern Iceland, on the southern shore of Faxaflói Bay. With a population of around 120,000 (and over 200,000 in the Greater Reykjavík Area), it is the heart of Iceland's economic and governmental activity.

Reykjavík is believed to be the location of the first permanent settlement in Iceland, which Ingólfur Arnarson is said to have established around 870 C.E. Until the 18th century, there was no urban development in the city location. The city was founded in 1786 as an official trading town and grew steadily over the next decades, as it transformed into a regional and later national centre of commerce, population, and governmental activities.

The first permanent settlement in Iceland by Norsemen is believed to have been established in Reykjavík by Ingólfur Arnarson around AD 870; this is described in Landnámabók, or the Book of Settlement. Ingólfur Arnarson is said to have decided the location of his settlement using a traditional Viking method; by casting his high seat pillars (Öndvegissúlur) into the ocean when he saw the coastline, then settled where the pillars came to shore. Steam from hot springs in the region is said to have inspired Reykjavík's name, which loosely translates to Smoke Cove (the city is often referred to as the Bay of Smokes or Bay of Smoke) The original name was Reykjarvík with an additional "r" that vanished around 1300.^{[citation needed]}

Iceland ⁱ/ˈaɪslənd/ (Icelandic: Ísland, IPA: [ˈislant]) is a Nordic European island country in the North Atlantic Ocean, on the Mid-Atlantic Ridge. The country has a population of about 320,000 and a total area of 103,000 km² (40,000 sq mi). The capital and largest city is Reykjavík, with the surrounding areas in the southwestern region of the country being home to two-thirds of the country's population. Iceland is volcanically and geologically active. The interior mainly consists of a plateau characterised by sand fields, mountains and glaciers, while many glacial rivers flow to the sea through the lowlands. Iceland is warmed by the Gulf Stream and has a temperate climate despite a high latitude just outside the Arctic Circle.

According to Landnámabók, the settlement of Iceland began in AD 874 when the chieftain Ingólfur Arnarson became the first permanent Norse settler on the island. Others had visited the island earlier and stayed over winter. Over the following centuries, Norsemen settled Iceland, bringing with them thralls (slaves) of Gaelic origin. From 1262 to 1918 Iceland was part of the Norwegian and later the Danish monarchies. Until the 20th century, the Icelandic population relied largely on fisheries and agriculture, and the country was one of the poorest and least developed in the world. Industrialisation of the fisheries and aid from the Marshall Plan brought prosperity in the years after World War II, and by the 1990s it was one of the world's wealthiest countries. In 1994, Iceland became party to the European Economic Area, which made it possible for the economy to diversify into economic and financial services.