[1] Following the elections, a coalition government was formed by the Independence Party and the Social Democratic Alliance, with Geir Haarde continuing as Prime Minister.

The Fighting Union, an advocacy party for disabled and senior citizens' rights, failed to present lists of candidates in due time in five out of six constituencies, and therefore decided to withdraw from the elections.

[5] After five days of speculation, it was decided on 17 May that the government would resign and the 12-year-long coalition between Independence Party and Progressive would end.

Simultaneously, he was assigned by the President of Iceland, Ólafur Ragnar Grímsson, the mandate to form a new majority coalition.

The coalition meetings between the Independence Party and the Alliance were held in Reykjavík and at Þingvellir, where Alþingi was established in the year of 930.

In the government's manifesto, it stated that it would focus on children, the elderly and the environment, as well as aiming to lower taxes, raise benefits and invest heavily in education and transportation.

[8] The Social Democratic Alliance was more environmentalist and pro-EU and opposed the war in Iraq and Iceland's participation in the "Coalition of the Willing".

Nevertheless, no action was announced to stop or reconsider the building of large-scale industrial complexes such as aluminium smelters and the development of new power plants, especially hydropower stations, or the country's participation in the war.

[10] On 23 May the chairman of the Progressive Party, Jón Sigurðsson, the outgoing Minister of Industries and Commerce, announced his resignation, due to poor results in the election.