A sparsely-populated North Atlantic island, Iceland is famous for its hot springs, geysers and active volcanoes. Lava fields cover much of the land and hot water is pumped from under the ground to supply much of the country's heating.
Iceland became an independent republic in 1944 and went on to become one of the world's most prosperous economies. However, the collapse of the banking system in 2008 exposed that prosperity as having been built on a dangerously vulnerable economic model.
The affluence enjoyed by Icelanders before 2008 initially rested on the fishing industry, but with the gradual contraction of this sector the Icelandic economy developed into new areas.
Republic of Iceland
Area 103,000 sq km (39,769 sq miles)
Major language Icelandic
Major religion Christianity
Life expectancy 80 years (men), 84 years (women)
President: Gudni Johannesson
University historian Gudni Johannesson won Iceland's presidential election in June 2016 on his 48th birthday.
He secured 39.1% of the vote, ahead of Halla Tomasdottir, a private equity executive, on 27.9%.
A political outsider, he campaigned for the largely ceremonial post by pledging to restore Icelanders' faith in their system of government after years of public dissatisfaction with politicians first sparked by the country's banking collapse in 2010.
Mr Johanesson succeeded Olafur Ragnar Grimsson, who stepped down in August 2016 after 20 years.
Prime minister: Katrin Jakobsdottir
Katrin Jakobsdottir became prime minister after her Left-Green Movement agreed to form a coalition government in November 2017.
Her party emerged as the second biggest party in snap parliamentary elections the previous month.
The coalition has a clear majority in parliament, but it brings together disparate groups - the conservative Independence Party, the centrist Progess Party, and Ms Jakobsdottir's own leftist group.
Outgoing Prime Minister Bjarni Benediktsson called the snap election in September, after less than a year in government, as a scandal involving his father prompted a government ally to drop out of his ruling coalition.
National public radio and TV are provided by the state-owned Icelandic National Broadcasting Service (RUV).
Ownership of private media is highly concentrated.
The constitution guarantees press freedom.
Almost all Icelanders are online, and around half of them use online outlets as their main source of news.
Some key dates in Iceland's history:
1918 - Iceland achieves full self-government under the Danish crown.
1940 - German forces occupy Denmark. British forces occupy Iceland.
1941 - The United States takes over the defence of Iceland and stations tens of thousands of troops there.
1943 - The Treaty of Union with Denmark runs out, with Denmark still occupied by Nazi Germany.
1944 - Icelanders vote in a referendum overwhelmingly to cut all ties with Denmark and become a republic. The Republic of Iceland is proclaimed.
1944 - Iceland becomes a member of Nato.
1970 - Iceland joins European Free Trade Association (EFTA).
2008 - After years of growth between the late 1990s and mid-2000s, Iceland's economy collapses as a result of massive currency depreciation and the failure of its domestic banking industry.