Icelandic filmmakers are industrious and creative, and have made Icelandic cinema an important part of both Icelandic culture and the Icelandic economy. The film industry is thriving and produces several films each year. Iceland's scenic landscape is also a popular location for shooting big budget Hollywood productions, such as Die Another Day, Journey to the Centre of the Earth, Batman Begins and Flags of our Fathers. Icelandic authorities also provide a generous refund policy on production costs for foreign film makers. The Film in Iceland agency helps foreign film companies who are looking to shoot in the country.

Several Icelandic filmmakers have gained international recognition, such as Friðrik Þór Friðriksson, whose film Children of Nature was nominated for an Academy Award for Best Foreign Film in 1991. Dagur Kári's full length debut, Nói Albínói received critical acclaim and was nominated for the European Film Awards in 2003. Dagur Kári has gone on to make movies such as The Good Heart. Another successful Icelandic filmmaker is Baltasar Kormákur, who has turned his Icelandic hits like 101 Reykjavík into a fledging Hollywood career. But the biggest name in Icelandic film industry remains Sigurjón Sighvatsson, producer, whose long filmography includes such varied titles as Beverly Hills 90210, Zinedine: A 21st Century Portrait, to cult favorites such as Wild At Heart.  

Lately, Icelandic television production has been on the rise. Children’s television programme LazyTown has also seen unprecedented success abroad, with stations in dozens of countries around the world broadcasting its message of living healthy lifestyles. The Night Shift, a sitcom about the hapless lifes of the night shift personnel at a petrol station, has received critical acclaim and been broadcast in several European countries, while a US remake is in the works.   

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