Norway staged a fine second-half comeback to make a flying start to their Euro 2012 qualifying campaign.
Egil Olsen's side went behind shortly before half-time in Reykjavik when veteran QPR striker Heidar Helguson scored for Iceland.
But captain Brede Hangeland showed his team the way with an equaliser after 58 minutes, and Mohammed Abdellaoue hit the winner 17 minutes later.
Few chances fell to either side in the early stages, and when Iceland had an opportunity just before the half-hour mark they could not make it count, with Veigar Pall Gunnarsson's header gathered by visiting goalkeeper Jon Knudsen.
John Arne Riise slammed a free-kick into the Iceland wall, before the hosts went into the lead in the 39th minute.
Gylfi Sigurdsson, fresh from his move from Reading to Hoffenheim, took possession on the right flank and crossed well for Helguson to turn the ball in with his heel.
Abdellaoue threatened an equaliser before the break but Gunnleifur Gunnleifsson denied him with a save by the left post.
The same player was thwarted by Gunnleifsson in the 53rd minute when the goalkeeper kept out his close-range header.
Hangeland, the Fulham defender, hauled the visitors back to level terms when he met Erik Huseklepp's corner from the right and powered a header into the bottom-left corner.
Morten Gamst Pedersen set up the winning goal as his pass picked out Abdellaoue who tucked the ball under Gunnleifsson.
Abdellaoue had the chance to hand Norway a two-goal cushion but shot over the bar, before Pedersen wasted another chance.