Reykjavík is the capital and largest city of Iceland. It is located on the southern shore of the Faxaflói bay in southwest Iceland and has a latitude of 64°08′ N, making it the world's northernmost capital of a sovereign state. Reykjavík has a population of around 139,000 as of 2025, and the surrounding Capital Region has a population of around 249,000, constituting approximately 64% of Iceland's population.

According to Landnámabók, the settlement of Iceland began in Reykjavík when Ingólfur Arnarson arrived from Norway in the year 874. For over 900 years following this, there was no urban development; the city was officially founded in 1786 as a trading town and grew steadily as it transformed into its current state as the centre of Iceland's cultural, economic, and governmental activity. It is popular with tourists and is consistently ranked as one of the cleanest, safest, and most environmentally friendly cities in the world.

According to legend, the first permanent Norse settlement in Iceland was established at Reykjavík by Ingólfr Arnarson circa AD 870, as described in the Book of Settlement. Ingólfr is said to have decided the location of his settlement using a traditional Norse method: when land was in sight, he cast his high seat pillars overboard and promised to settle where the gods decided to bring them ashore. Two of his slaves then searched the coasts for three years before finding the pillars in the bay which eventually became the site of Reykjavík.

The name is of Old Norse origin, derived from the roots reykr ('smoke') and vík ('bay'). The name is said to be inspired by steam rising from hot springs in the region. The original name was Reykjar-vík, with an "r" suffix for the genitive singular of reykr; the modern version reykja- uses the genitive plural. The name's meaning is still transparent in modern Icelandic, and in modern Norwegian (røyk + vik). The name originally referred to both the bay on the northern shore of the modern city centre, between Örfirisey [is] and Laugarnes, as well as the estate and farm of Ingólfr Arnarson. This form of the name fell out of use shortly after settlement, and the estate was referred to as Vík á Seltjarnarnesi until the name Reykjavík was revived when urban development began centuries later. The name has been translated as Bay of Smoke in English-language travel guides.

The site of the modern city centre was farmland until the 18th century. In 1752, King Frederik V of Denmark donated the estate of Reykjavík to the Innréttingar [is] corporation. The leader of this movement was Skúli Magnússon. In the 1750s, several houses were built to house the wool industry, which was Reykjavík's most important employer for a few decades and the original reason for its existence. Other industries were undertaken by the Innréttingar, such as fisheries, sulphur mining, agriculture, and shipbuilding.

The Danish Crown abolished monopoly trading in 1786 and granted six communities around the country an exclusive trading charter. Reykjavík was one of them and the only one to hold on to the charter permanently. 1786 is thus regarded as the date of the city's founding. Trading rights were limited to subjects of the Danish Crown, and Danish traders continued to dominate trade in Iceland. Over the following decades, their business in Iceland expanded. After 1880, free trade was expanded to all nationalities, and the influence of Icelandic merchants started to grow.

Icelandic nationalist sentiment gained influence in the 19th century, and the idea of Icelandic independence became widespread. Reykjavík, as Iceland's only city, was central to such ideas. Advocates of an independent Iceland realized that a strong Reykjavík was fundamental to that objective. All the important events in the history of the independence struggle were important to Reykjavík as well. In 1845 the Alþingi, the general assembly formed in 930 AD, was re-established in Reykjavík; it had been suspended a few decades earlier when it was located at Þingvellir. At the time it functioned only as an advisory assembly, advising the king about Icelandic affairs. The location of Alþingi in Reykjavík effectively established the city as the capital of Iceland.

In 1874, Iceland was given a constitution; with it, Alþingi gained some limited legislative powers and in essence became the institution that it is today. The next step was to move most of the executive power to Iceland: Home Rule was granted in 1904 when the office of Minister for Iceland was established in Reykjavík. On 1 December 1918, Iceland became a sovereign country, the Kingdom of Iceland, in personal union with the Crown of Denmark.