The recorded history of Iceland began with the settlement by Viking explorers and the people they enslaved from Western Europe, particularly in modern-day Norway and the British Isles, in the late ninth century.

Recorded settlement has conventionally been dated back to 874, although archaeological evidence indicates Gaelic monks from Ireland, known as papar from sagas, may have settled Iceland earlier.

Iceland remained part of Denmark, but in keeping with the rise of nationalism around Europe in the nineteenth century, an independence movement emerged.

Although Iceland was neutral in the Second World War, the United Kingdom invaded and peacefully occupied it in 1940 to forestall a Nazi occupation, after Denmark was overrun by the German Wehrmacht.

Following the Second World War, Iceland was a founding member of the North Atlantic Treaty Organization and joined the United Nations one year after its establishment.

Iceland is very remote, and so has been spared the ravages of European wars but has been affected by other external events, such as the Black Death and the Protestant Reformation imposed by Denmark.

The twelfth-century scholar Ari Þorgilsson's Íslendingabók reasserts that items including bells corresponding to those used by Irish monks were found by the settlers.

Some Icelanders claimed descent from Cerball mac Dúnlainge, King of Osraige in southeastern Ireland, at the time of the Landnámabók's creation.

Archeological evidence strongly suggests that the timing is roughly accurate; "that the whole country was occupied within a couple of decades towards the end of the 9th century.

Some settlers coming from the British Isles were "Hiberno-Norse," with cultural and family connections both to the coastal and island areas of Ireland and/or Scotland and to Norway.

The parliament convened each summer at Þingvellir, where chieftains (Goðorðsmenn or Goðar) amended laws, settled disputes and appointed juries to judge lawsuits.

Early Norse settlers in Iceland followed Paganism, however, after the Eldgjá volcano eruption, many thought of it as an act from God and started to convert to Christianity instead with the help of Alþingi.

In the year 1000, as a civil war between the religious groups seemed likely, the Alþingi appointed one of the chieftains, Thorgeir Ljosvetningagodi, to decide the issue of religion by arbitration.

[15] After decades of internal conflict, the Icelandic chieftains agreed to accept the sovereignty of Norway and signed the Old Covenant (Gamli sáttmáli) establishing a union with the Norwegian monarchy.

Nonetheless, the Christian clergy had unique opportunities to accumulate wealth via the tithe, and power gradually shifted to ecclesiastical authorities as Iceland's two bishops in Skálholt and Hólar acquired land at the expense of the old chieftains.

It became more difficult to raise barley, the primary cereal crop, and livestock required additional fodder to survive longer and colder winters.

Church fast days increased demand for dried codfish, which was easily caught and prepared for export, and the cod trade became an important part of the economy.

With the introduction of absolute monarchy in Denmark–Norway in 1660 under Frederick III of Denmark, the Icelanders relinquished their autonomy to the crown, including the right to initiate and consent to legislation.

Jón Arason and Ögmundur Pálsson, the Catholic bishops of Skálholt and Hólar respectively, opposed Christian's efforts at promoting the Protestant Reformation in Iceland.

Opposition to the reformation ended in 1550 when Jón Arason was captured after being defeated in the Battle of Sauðafell by loyalist forces under the leadership of Daði Guðmundsson.

In 1874, a thousand years after the first acknowledged settlement, Denmark granted Iceland a constitution and limited home rule over domestic matters, which was expanded in 1904.

[34] Government involvement in the economy increased: "Imports were regulated, trade with foreign currency was monopolized by state-owned banks, and loan capital was largely distributed by state-regulated funds".

[47] The government's fiscal policy was strictly Keynesian, and their aim was to create the necessary industrial infrastructure for a prosperous developed country[citation needed].

It was considered essential to keep unemployment down and to protect the export fishing industry through currency manipulation and other means[citation needed].

Iceland became a charter member of the North Atlantic Treaty Organization (NATO) on 30 March 1949, with the reservation that it would never take part in offensive action against another nation.

As a consequence, Norway, Denmark, Germany, and other European nations have increased their defense and rescue cooperation with Iceland since the withdrawal of U.S. forces.

[52][53][54] It is rare for militarized interstate disputes of this magnitude and intensity to occur between two democracies with as close economic, cultural, and institutional ties as Iceland and the UK.

The governments of the 1990s and 2000s adhered to a staunch but domestically controversial pro-U.S. foreign policy, lending nominal support to the NATO action in the Kosovo War and signing up as a member of the Coalition of the willing during the 2003 invasion of Iraq.

[59] Following elections in May 2007,[60] the Independence Party, headed by Haarde, remained in government, albeit in a new coalition with the Social Democratic Alliance.

[76] While it is convenient to divide history into named periods, it is also misleading because the course of human events neither starts nor ends abruptly in most cases, and movements and influences often overlap.