At the time it was debated whether it was practical to develop two academic state libraries in Iceland.

The idea was that this new library building, Þjóðarbókhlaðan, would be opened in 1974 on the 1100th anniversary of the settlement of Iceland.

As the year 1974 drew near it became increasingly clear, however, that the Icelandic state would not be able to construct the building in time.

The 1973 Oil Crisis, among other things, resulted in a worsening of the state's finances meaning that most of the ideas for the anniversary year had to be significantly reduced or scrapped.

A groundbreaking ceremony for the new library was planned, instead of an inauguration, but even this was postponed until 1978 when construction finally began.

However, significant funds were needed to complete the interior and for the next ten years the large building stood empty.

Attempts were made to finance its completion with a special supplement on property tax, but most of that income was used for other expenses.

Finally in 1991, the new government of Sjálfstæðisflokkurinn and Alþýðuflokkurinn made it a priority to complete the building, and on 1 December 1994 it opened.

The combination of the two libraries in one building resulted in an accessible library where users have direct access to the academic collection and reference works on the shelves while the national and manuscript collections are available for on-site consultation in a separate reading hall.

[7] Since 2001, this system has been implemented nationwide for all public libraries in Iceland and is managed by a consortium.

The library signed the Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities in September 2012.

[8][9] The roles of the National and University Library are defined with a special law dating from 2011 and related regulations.

The library has the duty to collect and catalog all published Icelandic print, electronic and audio material for preservation and continued access.

The library manages subscriptions to scientific databases and electronic journals for the university and administers the office for national access to bibliographic databases and electronic journals, hvar.is, jointly financed by the Icelandic state and a consortium of Icelandic libraries, schools and research institutions and companies.

Access to highly valuable and rare items is restricted, but the library usually tries to make these available through its digital imaging production line.

The manuscript collections of the library can be consulted in a separate reading hall where the items are provided by request for on-site use.

The bulk of the academic collection consists of materials from the original library of the University of Iceland.

By request, the library reserves textbooks used in courses taught at the University of Iceland to ensure that they are available for on-site study.