In September 2009 he was hired as the editor of Morgunblaðið, one of Iceland's largest newspapers, a decision that caused nationwide controversy and was followed by resignations and widespread terminated subscriptions.

He contested the election for President of Iceland on 25 June 2016 but lost to Guðni Jóhannesson, coming in fourth place with 13.7% of the popular vote.

Davíð was one of the most popular and successful politicians in Icelandic history but was also highly controversial for his support for the Iraq War and for his part in the 2007-2008 financial crisis.

The group included Þorsteinn Pálsson, Geir H. Haarde, Jón Steinar Gunnlaugsson, Kjartan Gunnarsson, Magnús Gunnarsson, Brynjólfur Bjarnason and Hannes Hólmsteinn Gissurarson, and they published the magazine Eimreiðin from 1972 to 1975; they also followed with interest what was happening in the United Kingdom under Margaret Thatcher and in the United States under Ronald Reagan; they also read books and articles by and about Milton Friedman, Friedrich Hayek and James M. Buchanan, who all visited Iceland in the early 1980s and whose messages of limited governments, privatisation, and liberalisation of the economy had a wide impact.

In record time, Davíð formed a coalition government with the social democrats, Alþýðuflokkurinn, whose leader, Jón Baldvin Hannibalsson, became Minister of Foreign Affairs.

Jón Baldvin and Davíð jointly decided that Iceland should become the first state to renew recognition of the sovereignty and independence of the three Baltic countries, Estonia, Latvia and Lithuania, prior to the collapse of the Soviet Union.

[citation needed] Davíð's government inherited a huge budget deficit and a number of unproductive investments: much money had been spent on fish farming for example, with little result.

The budget deficit was turned into a surplus in 1996, not least because of the close cooperation between Davíð and Friðrik Sophusson, the Minister of Finance, who had also been a prominent young libertarian.

[citation needed] It also helped the Davíð Oddsson government that there was a consensus between the labour unions and the employers that the rampant inflation of the 1980s, with huge, but largely meaningless, wage increases, could not go on; therefore, in 1990, the unions and the employers had signed a "National Accord", whereby wage increases would be moderate, and government would be assisted in bringing down inflation.

Davíð Oddsson therefore decided to form a coalition with the Progressive Party, whose leader, Halldór Ásgrímsson, became Minister of Foreign Affairs.

Davíð's two governments were staunch allies of the United States and strongly in support of NATO, of which Iceland is a founding member.

Since the fall of the Soviet Union, there has been some uncertainty about whether the United States defence force could or should remain in Iceland, having been invited there in 1951, at the height of the Cold War.

During his days as political leader, he also pursued his literary interests, and in 1997 he published a collection of short stories, Nokkrir góðir dagar án Guðnýjar, which became a best-seller in Iceland.

[citation needed] Davíð celebrated his 50th birthday at a huge reception in Perlan, paid for by the Independence Party, and his friends published a Festschrift of more than 500 pages to which many Icelandic writers, scholars and politicians contributed papers.

[citation needed] However, in that same year, 2002, there began a controversy in Iceland about the Baugur Group, owned by the entrepreneurs Jóhannes Jónsson and his son, Jón Ásgeir Jóhannesson.

In summer 2002, the Icelandic police raided the headquarters of Baugur, after a disgruntled former employee of their American operations had produced what he claimed was evidence of financial irregularities.

In a speech on 9 February 2003, the main spokesperson of the Social Democratic Alliance, Ingibjörg Sólrún Gísladóttir, suggested that Davíð might be responsible for the tax investigation of businessman Jón Ólafsson, then owner of a private television station, and also for the police raid on Baugur.

[citation needed] In 2003, he led the liberalization of the banking laws in Iceland allowing less transparency which brought a huge amount of foreign money and high interest rates.

But in summer 2004, for the first time in the history of the Icelandic Republic, the president, Ólafur Ragnar Grímsson, refused to sign the bill into law.

[citation needed] Many people agreed that the media bill seemed to be a part of a political duel rather than an attempt to make general law.

During his 14 years as prime minister, Davíð became acquainted with, or a friend of, many Western leaders, including Bill Clinton and George W. Bush of the United States, Václav Klaus of Czechoslovakia and Silvio Berlusconi of Italy.

In April 2009, Davíð stated that Iceland needs to investigate the "unusual and unconventional loans" given by the banks to senior politicians during the years before the crisis.

[28] Throughout his political career, Davíð has repeatedly engaged in various forms of climate change denial and has criticized attempts to limit emissions of greenhouse gasses.

[29] In his 1997 new year's address, Davíð justified his stance by claiming it would be wrong to stoke people's fears on the basis of "sciences that rest on weak grounds".

[32] During Davíð's tenure as editor-in-chief of Morgunblaðið, the paper has continued to regularly publish editorials and opinion pieces denying the reality of climate change and criticizing efforts to combat it.