Iceland is famous for waterfalls, glaciers, volcanoes, and black sand beaches. But some of the country’s most memorable places are actually its small towns and villages. Scattered around the coast and hidden inside dramatic fjords, these towns look like they were pulled straight from a postcard.
Colorful houses, fishing harbors, mountain backdrops, and quiet roads make these destinations perfect for a self-drive trip around Iceland.
Many of Iceland’s most scenic towns are difficult to visit by public transport, especially if you want the freedom to stop at viewpoints, waterfalls, and hidden attractions along the way. Renting a car in Iceland gives you the flexibility to explore at your own pace while enjoying some of the country’s most beautiful drives.
Here are 10 Iceland towns that truly look like a postcard, plus how to get there by car.
1. Seyðisfjörður
Tucked deep inside a narrow fjord in East Iceland, Seyðisfjörður is one of the most photogenic towns in Iceland. Known for its colorful wooden houses, artistic atmosphere, and famous rainbow street leading to the blue church, this small fishing town feels completely different from the rest of the country.
Surrounded by steep mountains and waterfalls, the drive into Seyðisfjörður is just as impressive as the town itself.
How to get there
From Egilsstaðir, drive Route 93 over the mountain pass into Seyðisfjörður. The drive takes around 30 minutes.
Driving conditions
The mountain road can be snowy and icy in winter. During summer, it is an easy and scenic drive with a standard 2WD rental car.
2. Stykkishólmur (Snæfellsnes Peninsula)
Located on the northern side of the Snæfellsnes Peninsula, Stykkishólmur is often called one of Iceland’s prettiest fishing towns. The colorful harbor, calm atmosphere, and ocean views make it feel like a classic Icelandic postcard.
This town is also a great base for exploring the Snæfellsnes Peninsula, including Kirkjufell mountain, black sand beaches, and lava fields.
How to get there
Drive north from Reykjavík via Route 1 and Route 54. The drive takes about 2.5 to 3 hours.
Driving Conditions
Accessible year-round with a 2WD car, although winter weather can still affect road conditions.
3. Vík í Mýrdal (South Coast)
Vík is one of the most famous towns in Iceland thanks to its dramatic location beside black sand beaches and towering sea stacks. The small church overlooking the village has become one of Iceland’s most iconic views.
Nearby attractions include Reynisfjara Beach, Dyrhólaey, and the Mýrdalsjökull glacier.
How to get there
Drive the Ring Road (Route 1) east from Reykjavík for around 2.5 hours.
Driving Conditions
The road is paved and accessible year-round, although strong wind conditions are common in winter.
4. Siglufjörður (North Iceland)
Surrounded by steep mountains and a narrow fjord, Siglufjörður feels like a hidden Arctic village. Once the herring fishing capital of Iceland, the town is now known for its colorful harbor, peaceful atmosphere, and beautiful scenery.
It is one of the most scenic towns to visit in North Iceland.
How to get there
Drive north via Route 1 and continue on Route 76 through the mountain tunnels. The drive from Akureyri takes about 1.5 hours.
Driving Conditions
Roads are paved and maintained year-round, but snow and icy conditions are common in winter.
5. Ísafjörður (Westfjords)
Ísafjörður is the largest town in the Westfjords, surrounded by dramatic mountains and deep fjords. Despite being the region’s main town, it still feels remote and untouched.
The colorful old houses and stunning coastal scenery make it one of the most beautiful places in Iceland.
How to get there
Drive from Reykjavík via Route 60 into the Westfjords. The drive takes around 5 to 6 hours.
Driving Conditions
Roads in the Westfjords can be narrow, steep, and gravel in some sections. A 4×4 rental car is highly recommended outside summer.
6. Húsavík (North Iceland)
Húsavík is best known as Iceland’s whale watching capital, but the town itself is also incredibly charming. Colorful houses, a scenic harbor, and mountain views make it one of the most postcard-worthy destinations in North Iceland.
The town became internationally famous after the Eurovision movie starring Will Ferrell.
How to get there
Drive east from Akureyri via Route 1 and Route 85. The drive takes around 1 hour.
Driving Conditions
Accessible year-round with normal road conditions for Icelandic winters.
7. Djúpivogur (East Iceland)
Djúpivogur is a peaceful coastal village located along the Eastfjords. With colorful houses, mountain scenery, and a quiet harbor, it is one of Iceland’s most relaxing small towns.
The nearby Eggin í Gleðivík sculpture installation has become one of the town’s most famous attractions.
How to get there
Drive along the Ring Road (Route 1) through East Iceland.
Driving Conditions
Accessible year-round, though weather conditions can change quickly during winter.
8. Grundarfjörður (Snæfellsnes Peninsula)
Grundarfjörður is home to Iceland’s most photographed mountain, Kirkjufell. The combination of the small harbor town, surrounding mountains, and nearby waterfalls creates one of the most iconic postcard views in Iceland.
How to get there
Drive from Reykjavík via Route 54 around the Snæfellsnes Peninsula. The drive takes around 2.5 to 3 hours.
Driving Conditions
Accessible year-round with a 2WD car in normal conditions.
9. Eskifjörður (East Iceland)
Eskifjörður is a quiet fishing town surrounded by steep mountains and calm fjord views. It feels less touristy than many other towns in Iceland, making it a great stop during a Ring Road self-drive trip.
How to get there
Drive along Route 1 and connect to Route 92 in East Iceland.
Driving Conditions
Roads are paved and generally accessible year-round.
10. Arnarstapi (Snæfellsnes Peninsula)
Although technically a small village rather than a town, Arnarstapi deserves a place on this list. The dramatic cliffs, ocean views, lava formations, and tiny harbor make it one of the most scenic coastal stops in Iceland.
How to get there
Drive from Reykjavík via Route 1 and Route 54 toward the Snæfellsnes Peninsula.
Driving Conditions
Easy to access year-round with a normal rental car.
Why a Self-Drive Trip Is the Best Way to Explore Iceland’s Small Towns
Many of Iceland’s most beautiful towns are located far from major cities and public transport routes. Renting a car in Iceland gives you the freedom to:
- Explore scenic coastal roads at your own pace
- Stop at waterfalls, viewpoints, and black sand beaches along the way
- Visit remote regions like the Westfjords and Eastfjords
- Travel beyond the typical tourist routes
- Discover hidden villages and local restaurants
For summer road trips, a standard 2WD rental car is often enough for the Ring Road and popular towns. If you plan to visit the Westfjords, Highlands, or travel during winter, a 4×4 rental in Iceland is the safer and more practical option.
Best Time to Visit Iceland’s Scenic Towns
Summer (June to August)
- Easier road conditions
- Midnight sun and long daylight hours
- Best for Ring Road and Westfjords trips
Winter (November to March)
- Snow-covered postcard scenery
- Northern Lights opportunities
- More challenging driving conditions
Shoulder Seasons (May and September)
- Fewer tourists
- Lower car rental prices
- Good balance of daylight and road accessibility
Tips for Driving Between Iceland’s Small Towns
- Always check road conditions on road.is
- Monitor weather forecasts on vedur.is
- Fuel stations can be limited in remote areas
- Gravel roads are common in the Westfjords and Eastfjords
- Winter tires are essential during colder months
- Avoid driving long distances in bad weather or darkness during winter
FAQ About Iceland’s Most Beautiful Towns
- What is the prettiest town in Iceland?
Many travelers consider Seyðisfjörður, Stykkishólmur, and Siglufjörður among the prettiest towns in Iceland thanks to their colorful houses and dramatic scenery.
- Can you drive to all these towns with a 2WD rental car?
Most towns on this list are accessible with a 2WD car during summer. However, visiting the Westfjords or traveling in winter is safer with a 4×4 rental car.
- What Iceland town is best for photography?
Grundarfjörður is one of the best photography locations in Iceland because of Kirkjufell mountain. Seyðisfjörður and Vík are also extremely popular for photographers.
- Are Iceland’s small towns worth visiting?
Yes. Iceland’s small towns offer a quieter and more authentic experience compared to the busy tourist attractions around Reykjavík and the Golden Circle.
- What is the best road trip route to visit these towns?
The Ring Road is the best route for visiting many of Iceland’s scenic towns. Adding the Snæfellsnes Peninsula and Westfjords creates an even more complete self-drive trip around Iceland.