REYKJAVIK Reykjavik is by far the largest municipality in Iceland and the capital city of the country. Discover the best top things to do in Reykjavík. Reykjavík is the capital and largest city of Iceland. It is located in southwestern Iceland, on the southern shore of Faxaflói bay. 24 Okt 2024 — All digital services, information, and administration for all kinds of people and businesses in one place.