Iceland's first national flag was a white cross on a deep blue background.

[4] According to a legend described in Andrew Evans' Iceland,[5] a red cloth with a white cross fell from the heavens, ensuring Danish victory at the Battle of Valdemar in the 13th century.

The civil flag of Iceland had been used as an unofficial symbol since the late 19th century, originally as a white cross on a blue background.

The current design was adopted on 19 June 1915, when King Kristján X issued a decree allowing it to be flown in Icelandic territorial waters, where only the Danish flag had been permitted, and stipulating that a red cross was to be incorporated into the design to distinguish it from similar foreign flags.

[4] On 17 June 1944, the day Iceland became a republic, a law was issued that dealt with the national flag and the coat of arms.

It also goes into details of usage, such as how the flag should be attached in different situations such as on a flagpole, on a house and on different kinds of ships.

The owner must follow instructions on its usage and make sure that his or her flag is in mint condition regarding colouring, wear and tear.

It also states that no one shall disrespect the flag in act or word, subject to a fine or imprisonment of up to one year.

The Icelandic state flag (Ríkisfáni), known as the Tjúgufáni, was first flown on 1 December 1918 from the house of ministry offices although laws regarding its uses had not been finished.