Multiple births are very common in Icelandic ewes, with a lambing percentage of 175–220%. A gene also exists in the breed called the Þoka gene, and ewes carrying it have been known to give birth to triplets, quadruplets, quintuplets, and even sextuplets on occasion.

Ewes can be mated as lambs as early as five to seven months, although many farmers wait until the ewe's second winter before allowing them to breed. They are seasonal breeders and come into estrus around October. The breeding season can last up to four months. 

Icelandic Rams become mature early and can start breeding as early as five months.

Icelandic sheep is generally short legged and stocky. The face and legs are free of wool. The fleece is dual-coated and comes in white as well as a range of browns, grays and blacks. Icelandic fleece is dual-coated. In Icelandic, the long outer coat is called tog and the fine inner coat þel. When separated, the outer and inner coats are used for different woolen products. Icelandic's wools are lower lanolin (Wax, Oil) it is easier than many types for spinners to work with raw wool, and the range of fantastic colours arising naturally, it is a major selling factor in the U.K. at present. 

In Iceland, this breed is mostly bred for meat. Lambs are not fed grain or given hormones. The lambs are ready for killing by four to five months, when they weigh 32 to 41 kg.

Until the 1940s, Icelandic sheep were the predominant milk producing animal in Iceland. Traditionally, after the first two weeks of life, the lambs were weaned off the mother's milk. Then for the next six weeks, the ewes were milked daily. 

Most provided about 1 litre of milk per day, while good ewes gave 2 litres to 3 litres. The milk was used directly, or made into butter, cheese, an Icelandic soft cheese called skyr, or naturally sweet yogurt.