Iceland has strengthened its institutional and legislative framework for environmental management in line with its broader environmental agenda. This chapter analyses Iceland’s environmental governance system, including mechanisms for horizontal and vertical co-ordination and for evaluating the environmental impact of sectoral policies. It reviews key environmental and sustainable development initiatives, including the country’s National Strategy for Sustainable Development 2002-2020. It examines the regulatory framework for environmental management and the enforcement and compliance assurance activities. The promotion of environmental democracy is also discussed.