Some Icelanders still believe in elves, trolls and hidden people. The vikings settled Iceland and shared this little island with all the creatures hiding between the lava and moss, and respected the Norse Gods who ruled.
Finding Elves in Iceland
You can wander around many parts of Iceland and hear local farmers tell you stories of their elf neighbours. Hafnarfjörður, a town right outside Reykjavik, offers elf tours around the lava rock landscape. The Icelandic Elf School, Álfaskólinn, offers certificate programs in elf studies right here in Reykjavik. Elf Tours gives tours in the East of Iceland, in Borgafjörður Eystri, complete with accommodation and multi-day trips. If you want to read up on what elves look like and where they live, check out Denni Karlsson's book 'Elves in Iceland', but don't expect to see much since they are invisible to everyone except those they choose to reveal themselves to.
Just be careful not to mess with the elves, since they're capable of putting spells on people and being very mischievous if you decide to disturb their living spaces. Even the Icelandic Road Authority has had to change and divert projects worth billions (ISK) to avoid the breaking down of equipment and other superstitious worries.
Viking Tourism in Iceland
Iceland was settled in the Viking age, by the vikings themselves, who came from the Norse kingdom of mainland Europe. Many scientists and archeologists flock to Iceland to dig up the history of settlement, and discover all there is to know about how the vikings lived. In Reykjavik, you can visit the 871+/-2 Settlement Exhibit, which is an excavation of the oldest found farm in Iceland, and believed to be the location of Iceland's first settlement.
The best places to visit in Iceland to learn some viking history are the historical settings of the sagas. Njála country, in and around Hvolsvöllur in South Iceland, gives you the history of Njáll, the star and hero of Brennu-Njáls Saga. Drangey island in Skagafjörður can be visited from Sauðárkrókur to see the island where Grettir was banished. Reykholt in Borgarfjörður and Hólar in Skagafjörður are the settings of the first two episcopal sees in Iceland, where you can visit the bishoprics where many of the saga manuscripts were written. But before you go, make sure you read some sagas and eddic poetry (Snorra Edda or the Prose Edda), to learn the stories of Njáll, Grettir, and the sagas of early Icelanders (Islendingasögur).
Norse Gods and Pagan Religion in Iceland
Iceland officially converted to Christianity in the year 1000, but pagan traditions remained alive and well in the society up until modern times. Today there is still an active pagan religious following, called Ásatrú, and pagan rituals are still practiced by modern Icelanders. It's possible to make a trip to Ísafjarðardjúp to the farm Heimabær in Arnardalur valley and participate in heathen ceremonies over the summer, and easier yet, some pagan festivals have become modern day traditions like Þorrablót. Þór is the famous thunder god from pagan mythology, and blót is a ceremony which used to involve sacrifices to pagan gods, but today Þorrablót is a feast of sour foods and rotten meats that all Icelanders enjoy at the end of January. Try to make friends with a local to get invited to this special event!