New Portugal coach Paulo Bento claimed his second-straight win since taking charge as his side eased past Iceland to continue to haul themselves back into contention to qualify from Group H in Euro 2012 qualifying.
Cristiano Ronaldo's stunning free-kick gave the Iberian side the best possible start but they were stunned when Helgi Danielsson levelled for the hosts.
Liverpool midfielder Raul Meireles struck to put them back in front just before the half-hour mark and substitute Helder Postiga sealed the win in the second half.
Real Madrid star Ronaldo opened the scoring in just the third minute after Heidar Helguson had fouled Carlos Martins, producing a trademark set-piece that left Gunnleifur Gunnleifsson with no chance.
But to their credit the hosts wasted little time in getting themselves back on level terms as Danielsson got on the scoresheet in the 18th minute.
Indridi Sigurdsson whipped an excellent cross into the box and the midfielder was on hand to power a header into the roof of the net.
Hugo Almeida dragged an effort wide as Portugal looked to respond before Meireles re-established their lead after 27 minutes, drilling home from fully 25 yards.
Gunnleifsson tipped another Ronaldo effort round the post as the visitors piled on the pressure and Meireles unleashed a fierce drive from way out which crashed against the crossbar.
After that succession of first half action the second stanza proved to be a more sedate affair, although Manchester United winger Nani forced Gunnleifsson into another agile save with just over 20 minutes remaining.
And Postiga made the points safe as he was left with the simple task of tapping home Ronaldo's ball across the six-yard box.
Ronaldo blazed over the bar as he looked to further extend his side's advantage, with Sporting Lisbon striker Postiga also missing a fine chance to grab his second of the game as his side moved up to second in the table - having played one game more than their rivals.