The skrýmsli (monster) was seen at the lake in 1749–1750, and the media have reported sightings into the 20th and 21st century, including a 2012 video supposedly showing the creature swimming.

[1] According to the folktale published in Jón Árnason's collection (1862), a "heath worm" (type of slug) kept with gold grew into a monster inhabiting the lake.

[4] A sightseeing boat named Lagarfljótsormurinn, which began operations on the lake in 1999,[2] and the Gunnar Gunnarsson Institution in Skriðuklaustur seek to preserve the traditions of the Lagarfljót Worm for cultural and tourism purposes.

[4] In February 2012, the Icelandic national broadcaster, RÚV, published a video thought to show the Lagarfljót Worm swimming in snow-covered icy water.

[18] A description of a supposed river-serpent that dwelled in Lagarfljót river occurs in De mirabilibus Islandiae (Chapter VI), written by the Bishop Gísli Oddsson [is] of Skálholt (d. 1638).

[19][20] A folktale published by Jón Árnason in 1862, collected from a schoolgirl of Múlasýsla in 1845[21] tells the story of the great serpent in Lagarfljót which originally started out as small "heath-worm"[22] or "Heath Snake"[23] (Icelandic: lyngormur) before it grew to unmanageable size.

Frightened, she threw both it and the gold into the lake, where the heath-worm continued to grow and terrorize the countryside, spitting poison and killing people and animals.

Two Finns were commissioned to destroy it and retrieve the gold, but they only managed to tie its head and tail to the bottom of the lake; killing it was made impossible because of a still larger dragon that lurked underneath.

[11] There has been suggestion that this is a corruption of the lore surrounding creatures from Norse mythology, namely the Miðgarð Serpent and Fenriswolf, with some elements of Fáfnir, the gold-hoarding dragon of Gnitaheiði [is] from the Völsung Cycle.

[32][33] The legend that keeping a brekkusnegill (black slug) together with gold will make both grow enormous is associated with other bodies of water, namely Skorradalsvatn (see below),[24][34] Kleifarvatn, and the Hvítá and Skaftá Rivers.

[24] Accounts of a serpent sitting on gold, the poisonous skate, and a strange giant seal localized at Lagarfljót are told of in the baroque poem "Rönkufótsríma" by Stefán Ólafsson [is] (d.

[f][36][35][20] The gold-hoarding serpent according to the poem measured one-half Þingmannleið in length or approximately 20 km,[g] and had its head and tail pinned to the ground (lakebed).

[11] Baring-Gould (1863) had obtained reports about a 46 feet long lake monster (which he referred to as a "skrimsl") allegedly surfacing in Skorradalsvatn and witnessed by at least three farmers.

[44][45] Jón Árnason remarked that there were non-believers of the worm in his time in the 19th century who offered the rational explanation that clumps of foam drifting past could have misled witnesses.