Ytterbium(II) iodide can be prepared by heating ytterbium(III) iodide:[1] It can also be prepared by reacting metallic ytterbium with 1,2-diiodoethane in tetrahydrofuran:[3] Although the reaction takes place at room temperature, due to the sensitivity of the reagents it is necessary to work anhydrous and under inert gas.

Otherwise, if oxygen is present, rapid oxidation to ytterbium(III) takes place.

This can be visually recognized by the color change from green to yellow solution.

[1] Ytterbium(II) iodide sinters at 0.01 Torr from about 780 °C and gives a viscous melt at about 920 °C.

At around 800 °C, a yellow sublimate of ytterbium(II) iodide is observed on the glass walls; this partly obscures the disproportionation.