From 1978 to 2009 the team never qualified for tournament finals. In late 2010, the team sealed qualification to the championships for the very first team in their history. During the qualification stage they finished second in their group behind the Czech Republic and qualified for the playoffs as a result of being one of the best runners-up in the whole qualification process. Their most notable win came in a 4–1 home win over Germany. In the next stage they played against Scotland in a two-legged affair in which they won 4–2 on aggregate over the two games.
Their remarkable qualification campaign saw them qualify for the finals where they were drawn against Belarus, Denmark and Switzerland in Group A. In their first two group games they were comfortably beaten by Belarus and Switzerland. In their final group game they defeated Denmark who were the hosts of the tournament 3–1. Iceland would finish third in the group, level on points with the second placed and fourth placed teams. Following the end of the tournament, UEFA announced its Team of the Tournament with striker Kolbeinn Sigþórsson named on the list.