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Icelandic is a North Germanic language, the language of Iceland. It is an Indo-European language belonging to the North Germanic or Nordic branch of the Germanic languages. Historically, it was the western most of the Indo-European languages prior to the colonisation of the Americas. Icelandic, Faroese, Norn, and Western Norwegian formerly constituted West Nordic; Danish, Eastern Norwegian and Swedish constituted East Nordic. Modern Norwegian Bokmål is influenced by both groups, leading the Nordic languages to be divided into mainland Scandinavian languages and Insular Nordic (including Icelandic).

Most Western European languages have greatly reduced levels of inflection, particularly noun declension. In contrast, Icelandic retains a four-case synthetic grammar comparable to, but considerably more conservative and synthetic than, German. By virtue of its being in the Germanic family, which as a whole reduced the Indo-European case system, it is inappropriate to compare the grammar of Icelandic to that of the more conservative Baltic and Slavic languages of the Indo-European family, many of which retain six or more cases, except to note that Icelandic utilises a wide assortment of irregular declensions. Icelandic also possesses many instances of oblique cases without any governing word, as does Latin. For example, many of the various Latin ablatives have a corresponding Icelandic dative. The conservatism of the Icelandic language and its resultant near-isomorphism to Old Norse (which is equivalently termed Old Icelandic by linguists) means that modern Icelanders can easily read the Eddas, sagas, and other classic Old Norse literary works created in the tenth through thirteenth centuries.

The vast majority of Icelandic speakers—about 320,000—live in Iceland. There are over 8,000 speakers of Icelandic living in Denmark, of whom approximately 3,000 are students. The language is also spoken by some 5,000 people in the US and by over 1,400 people in Canada, with the largest group living in Manitoba, notably Gimli (Gimli being an Old Norse word for ‘heaven’). While 97% of the population of Iceland consider Icelandic their mother tongue, the language is in decline in some communities outside Iceland, particularly in Canada. Icelandic speakers outside Iceland represent recent emigration in almost all cases except Gimli, which was settled from the 1880s onwards.

The state-funded Árni Magnússon Institute for Icelandic Studies serves as a centre for preserving the medieval Icelandic manuscripts and studying the language and its literature. The Icelandic Language Council, comprising representatives of universities, the arts, journalists, teachers, and the Ministry of Culture, Science and Education, advises the authorities on language policy. Since 1995, on November 16 each year, the birthday of 19th-century poet Jónas Hallgrímsson is celebrated as Icelandic Language Day.

Early Icelandic vocabulary was largely Old Norse. The introduction of Christianity to Iceland in the 11th century brought with it a need to describe new religious concepts. The majority of new words were taken from other Scandinavian languages; kirkja (‘church’), for example. Numerous other languages have had their influence on Icelandic: French brought many words related to the court and knightship; words in the semantic field of trade and commerce have been borrowed from Low German because of trade connections. In the late 18th century, language purism began to gain noticeable ground in Iceland and since the early 19th century it has been the linguistic policy of the country (see linguistic purism in Icelandic). Nowadays, it is common practice to coin new compound words from Icelandic derivatives.

Icelandic personal names are patronymic (and sometimes matronymic) in that they reflect the immediate father (or mother) of the child and not the historic family lineage. This system—which was formerly used throughout the Nordic area and beyond— differs from most Western family name systems.