The climate of Iceland is cold oceanic (Köppen climate classification: Cfc) near the southern coastal area and tundra inland in the highlands. The island lies in the path of the North Atlantic Current, which makes the climate of the island more temperate than would be expected for its latitude just south of the Arctic Circle. This effect is aided by the Irminger Current, which also helps to moderate the island’s temperature. The weather in Iceland can be notoriously variable. The aurora borealis is often visible at night time during the winter.

The Icelandic winter is relatively mild for its latitude. The southerly lowlands of the island average around 0 °C (32 °F) in winter, while the highlands tend to average around −10 °C (14 °F). The lowest temperatures in the northern part of the island range from around -25 to -30 °C (-13 to -22 °F). The lowest temperature on record is −39.7 °C (−39.5 °F).

The average July temperature in the southern part of the island is 10–13 °C (50–55 °F). Warm summer days can reach 20–25 °C (68–77 °F). The highest temperature recorded was 30.5 °C (86.9 °F) at the Eastern fjords in 1939. Annual average sunshine hours in Reykjavik are around 1300, which is similar to towns in Scotland and Ireland.

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.