Smekkleysa's first work was a postcard drawn by Friðrik Erlingsson, who at that time was the guitar player of Sykurmolarnir (Icelandic for The Sugarcubes), a band led by Einar Örn and Björk.

This piece of art contained the faces of Mikhail Gorbachev and Ronald Reagan, a map of Iceland and the flags of the USSR and the United States as background, due to the Reykjavík Peace Summit that was to take place by October, 1986.

Around 5,000 copies of this image were sold and the funds were used by the group to release their first record, a 7" vinyl single by Sykurmolarnir titled Einn Mol'á Mann ("One Cube per Person") which contained the Icelandic versions of "Birthday" and "Cat", two songs that would appear later on their first album, Life's Too Good in 1987 through Elektra Records; an album that served to boost the international acclaim of The Sugarcubes.

A record store named after the company exists in midtown Reykjavík, and the Smekkleysa mail order service has been running for over 15 years.

The mail order handles all available Smekkleysa titles, plus selected Icelandic music released by other labels.