Although the Football Association of Iceland (Knattspyrnusamband Íslands or KSÍ) was founded as late as 1947, the Football Federation of Reykjavik – as authorised by the Icelandic Sports Federation – had overseen a national championship from 1912 onwards. Once established, the KSÍ was affiliated to FIFA in 1947, gaining UEFA membership seven years later.

Just three teams participated in the debut league season of 1912, yet the game gradually grew in popularity, even if the number of clubs increased slowly. By the KSÍ's formation year, there were 14 member clubs, of which eight remain fully active: Fram, KR, Víkingur and Valur from Reykjavik; Haukar and FH from Hafnarfjordur; and KA and Thór from Akureyri. Today, around 80 clubs fall under the KSÍ aegis.

The country's first official international was played in 1946, 12 months before the KSÍ's arrival on the scene. Denmark were in opposition and inflicted a convincing 3-0 defeat on the Icelandic side.

Iceland's first victory came in 1947, 2-0 against Finland in Reykjavik. Three years later the Icelandic team recorded one of the greatest wins in their history: Sweden were beaten 4-3 in the capital, with ÍA Akranes player Ríkhardur Jónsson scoring all four goals. The Swedes would not lose to Iceland again for 50 years, until they went down 2-1 in Reykjavik in August 2000. However, the side's lowest moment was in 1967 when Denmark inflicted a 14-2 defeat in Copenhagen.

In the last decade and a half, the team have regularly given eye-catching performances. A 1-0 success against Russia in 1998 and a 3-1 triumph over the Czech Republic in 2001 are among the highlights. Other notable results have been registered against strong football nations such as Norway and Northern Ireland. And one of the proudest days arrived in 2004, with Italy dispatched 2-0 in a Reykjavik friendly in front of a record crowd at Laugardalsvöllur Stadium.

That the side narrowly failed to qualify for both UEFA EURO 2000 and UEFA EURO 2004 shows how small footballing outposts like Iceland can worry big-name opponents. One reason for this development is the steady number of Icelandic players building professional careers abroad. Against this backdrop came the feat of qualification – at the expense of holders Germany – for the 2011 UEFA European Under-21 Championship in Denmark, the country's first representation at a major UEFA men's tournament.

The first Icelandic professional, and one of the greatest, was Albert Gudmundsson who played for Arsenal FC, AC Milan, and AS Nancy-Lorraine in the 1950s. A statue of Gudmundsson stands in front of the KSÍ headquarters. Other famous players include: Ásgeir Sigurvinsson, a captain of VfB Stuttgart; Atli Edvaldsson, a German Bundesliga striker; Arnór Gudjohnsen, who was with RSC Anderlecht and FC Girondins de Bordeaux; and Eyjólfur Sverrisson, who gave long fruitful service to Stuttgart and Hertha BSC Berlin, plus Beşiktaş JK in Turkey. Now more than 50 Icelanders ply their trade on foreign fields, mostly in England and Scandinavia. The best-known remains Eidur Gudjohnsen, whose CV displays a UEFA Champions League winners' medal with FC Barcelona and stints with Bolton Wanderers FC, Chelsea FC and AS Monaco FC.

Iceland's early international matches took place at the old Melavöllurinn Stadium in Reykjavik, where attendances of up to 10,000 were recorded for big games. The current main stadium, Laugardalsvöllur, was opened in the capital in 1957, and is now the real centre of Icelandic football. In 1968 more than 18,000 spectators watched a European Champion Clubs' Cup tie between Valur Reykjavík and Eusébio's SL Benfica. That attendance record stood until August 2004 when 20,204 fans saw Iceland beat Italy. By the turn of the decade, the stadium's basic capacity comprised 10,000 seating and 4,000 standing places.