The capital Reykjavik is by far the largest city in Iceland. Over 138,700 people live in the capital. The second largest city, Kópavogur, is located just outside of Reykjavik and has close to 40,000 inhabitants. Also the third largest city, Hafnarfjörður, can be found close to the capital. More than 375,000 people live in Iceland.

This statistic shows the degree of urbanization in Iceland from 2013 to 2023. Urbanization means the share of urban population in the total population of a country. In 2023, 94.04 percent of Iceland's total population lived in urban areas and cities. The population of Iceland Iceland is currently 94 percent urban, making it the eighth most urban country in the world. However, even though the majority of the population lives in urban areas, the island itself is not densely populated. The population overwhelmingly lives in the nation’s capital and largest city, Reykjavik, which is located in the southwest corner of the island and is considered the northernmost national capital in the world. Reykjavik is only home to around 120,000 people and has more of a suburban feel to it than that of an urban metropolis. Reykjavik has become the home base for the country’s booming tourist industry for those who want to venture out to explore the island’s vast wilderness. In 2014 alone, there were around 4.4 million tourists who stopped on the island for a short stay (413264). The two second largest cities, Kopavogur and Hafnarfjour, are also located very close to the capital, and are each home to around 30,000 people- significantly less than the population of Reykjavik. In total, the small island nation reports a population of around 330,000 people as of 2015, and these figures are not likely to grow significantly in the future, as the fertility rate is less than the natural replacement rate and annual population growth is also low.

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Most of the workforce in Iceland is employed in the area in and around the capital, Reykjavik. Almost two thirds of Iceland's total workforce of 204,900 people work in the capital area, underlining the centralization in Iceland. The southern region has the second largest workforce with 18,000 employees. With only 4,000 workers, the northwestern and Westfjords regions have the smallest number of employees.

Iceland ATMs in Largest Cities: 4 years of historical data from 2011 to 2015.

Over the five years through 2025, industry revenue is projected to mount at a compound annual rate of 0.4% to €113.5 billion. Supported by the EU Commission and European Investment Bank, urban public transport is becoming more sustainable, rolling out electric buses and low-emission trains. Bus Rapid Transit (BRT) systems have gained popularity as a cost-effective alternative to far more expensive urban rail investments. Similarly, European metro services remain major cities' primary public transport service, driven by convenience and accelerating urbanisation across Europe. Ridership levels play a crucial role in driving industry revenue growth and profitability. High ridership is essential for covering operational costs and informs decisions on reinvestment in infrastructure upgrades. Additionally, investments in these urban networks are significantly influenced by government policies, since many of them are publicly owned. The COVID-19 outbreak slashed passenger numbers, with many trains and bus services across Europe suspending or reducing operations amid lockdown orders. Recovery was sluggish in 2021 and remained subdued in 2022 due to the widespread adoption of remote and hybrid work arrangements, which have led to lasting changes in commuting patterns and negatively impacted industry fare income. Although some urban transport systems have fully recovered from the pandemic downturn in 2023, many still have not, limiting industry revenue. Additionally, escalating operating costs due to rampant inflation and the energy crisis have further hindered profitability. In response, urban networks are implementing cost-saving strategies, streamlining their workforce and actively investing in digitalisation to enhance operational efficiency. In 2025, industry revenue is forecast to grow by 0.4%. Over the five years through 2030, industry revenue is expected to climb at a compound annual rate of 4.2% to reach €139.6 billion. The Europe Strategy for low-emission mobility and EU urban mobility framework strive to boost the share of sustainable transport modes in urban transport systems, including increasing the number of electric buses in circulation. These strategies will help the EU reduce greenhouse gas emissions by at least 55% by 2030 and by 90% by 2050 while boosting investment in the industry. Similarly, autonomous shuttle services have the potential to support urban transit service expansion with lower capital and operating costs compared with other modes of public transport.

During rescue excavations in downtown Reykjavík in 1999 nearly 100 kg of well-preserved animal bone was recovered in investigations at Tjarnargata 3 C by Fornleifastofnun Islands (FSÍ) directed by Mjöll Snaesdóttir. This bone collection (or archaeofauna) was largely sieved (4 mm and 1 mm mesh wet screen) and represents one of the largest archaeofauna recovered from Iceland to date. Analysis was carried out at City University of New York’s Northern Science & Education Center’s two zooarchaeology laboratories at Brooklyn College and Hunter College in 2000-01. The analyzed bone materials were returned for long term curation at the National Museum of Iceland in January 2002.

The homicide rate in Iceland varied between 2010 and 2022, from roughly 0.3 murders per 100,000 inhabitants in 2019, to 1.37 in 2020. In real figures, the total number of homicides reached five in 2020, an unusually high number for Iceland; since 1994 there were six years where no intentional homicides were committed in Iceland, although the last of these was in 2008. Iceland generally has one of the lowest homicide rates in Europe. The most dangerous countries in Europe and worldwide In Europe, Latvia had the highest murder rate in 2021 with 5.1 per 100,000 inhabitants. Malta had the lowest with 0.39. Worldwide, Saint Kitts and Nevis is the world's most dangerous country to live in in terms of murder rate. The Caribbean island country had a homicide rate of 65 per 100,000 inhabitants. Nine of the 10 countries with the highest murder rates worldwide are located in Latin America and the Caribbean. Celaya in Mexico was the city with the highest homicide rate worldwide. Victims of homicides In most of the European countries, a higher share of the victims of homicides are men. France was the country with the highest number of homicides on the continent, whereas Malta and Iceland had the lowest. France both had the highest number of female and male victims.

In 2024, Iceland was the Nordic country with the highest degree of urbanization, with over 80 percent of the population living in cities, towns, or suburbs. It is also the only Nordic country with a higher degree of urbanization than the EU average. Norway is the country with the lowest degree of urbanization, but the share was unusually high between 2021 and 2023, which is probably down to a change in the classification of towns and suburbs, as a municipal reform altered the number and size of municipalities. The reform was revoked at the beginning of 2024.