The national final was held at the studios of broadcaster RÚV in Reykjavík, hosted by Steinunn Ólína Þorsteinsdóttir. Eight songs took part with the winner being chosen by televoting. The winning song was performed in Icelandic as "Birta". Among the other participants was Iceland's 2003 representative Birgitta Haukdal.
On the night of the final Two Tricky performed second in the running order, following the Netherlands and preceding Bosnia-Herzegovina. At the close of voting "Angel" had received only 3 points (2 from Denmark and 1 from Norway), placing Iceland joint last (with Norway) of the 23 entries, the second time the country had finished the evening at the bottom of the scoreboard. The 12 points from the Icelandic televote were awarded to Denmark.
The last-place finish meant that Iceland was relegated and did not take part in the 2002 contest.