Illugastadir is an ancient estate and a church site in the Fnjoska Valley. The churches there were dedicated to St. Nicolas during the catholic period and the present church was built in 1860-1861. About a century later, it was thoroughly renovated. Its pulpit dates back to 1683 and the two altarpieces are rather old.

The estate was abandoned and in The Workers Trade Union of Northern Iceland bought the property in 1966. Since then, many holiday houses have been built there for its members. Lignite and fossils of plants and seashells can be found in the nearby Selargil gully. The valley floor is covered with thick deposits from the ice age and geologists have discovered clear traces of a tertiary central volcano.