Reykjanes (The Steamy Peninsula) is the name of the south- westernmost tip of the country. The area is and looks very volcanically active and barren. The most conspicuous are the old shield volcanoes and the crater rows, which most probably were created in historic times.

There is much thermal activity and the nearby, powerful high temperature area has partially been harnessed to supply energy to a salt factory and a fish processing factory for drying fish heads. A Magnesium factory is in the planning stages. The first lighthouse of the country was built on top of a low mountain in the area in 1778. It collapsed because of the sea erosion of its foundations and the present one was built in 1907-08.

A short distance off the coast a 52 m high rock pillar, called Karl (The Giant), protrudes from the ocean and further out stands the 77 m high rocky island Eldey, The Fire Island, with the world's largest gannet colony (70.000 birds). In this area three islands have been created during submarine eruptions in historic times. They all disappeared soon after the eruptions ended. The distance from the capital is about 56 km.