1981 in Iceland

The following lists events that happened in 1981 in Iceland.

Incumbents

 * President – Vigdís Finnbogadóttir
 * Prime Minister – Gunnar Thoroddsen

Events

 * Iceland no longer has an army due to a shortage of money

Births

 * 7 January – Ármann Smári Björnsson, footballer
 * 22 March – Rakel Logadóttir, footballer
 * 29 April – Ragnhildur Steinunn Jónsdóttir, television personality
 * 13 July – Helgi Daníelsson, footballer
 * 31 August – Örn Arnarson, swimmer.
 * 5 September – Logi Gunnarsson, basketball player
 * 4 October – Friðrik Ómar, singer
 * 12 October – Indriði Sigurðsson, footballer
 * 17 October – Snorri Guðjónsson, handball player
 * 10 December – Hólmar Örn Rúnarsson, footballer
 * 14 December – Haraldur Freyr Guðmundsson, footballer

Deaths

 * 28 July – Magnús Kjartansson, journalist, writer and politician (born 1919).