Iceland participated in the Eurovision Song Contest 2021 in Rotterdam, Netherlands. Icelandic broadcaster (RÚV) chose Daði og Gagnamagnið to represent the nation with the song "10 Years", written by Daði Freyr Pétursson. were due to compete in the 2020 contest with "Think About Things" before the event's eventual cancellation, having won the of Iceland's national selection . For the 2021 contest, RÚV decided to continue its association with Daði , with the group's 2021 entry being selected internally and as such, no edition of was organised for 2021.
A music video for "10 Years" and a tie-in mobile game were released ahead of the contest to promote the entry. A COVID-19 infection among the members of Daði meant that the group were unable to perform "10 Years" live during the contest, however Iceland remained in the competition and competed using rehearsal footage recorded in the contest's arena in the days before the event. Iceland placed 2nd in the second semi-final, held on 20 May 2021, receiving 288 points, and qualified for the final held two days later, where the nation placed 4th with 378 points.
Background
Prior to the 2021 contest, Iceland had participated in the Eurovision Song Contest 32 times following its first entry in 1986 and had failed to participate on only two occasions since their debut. The contest has been broadcast in Iceland since as early as 1970, but the geographically-remote nation was prevented from competing until a stable satellite connection could be established to enable live transmission of it. Iceland had never won the contest ahead of the 2021 event, but had previously achieved two second place finishes, in with the song "All Out of Luck" performed by Selma and in with the song "Is It True?" performed by Yohanna. Following the introduction of semi-finals for the , Iceland's entries appeared in the final on nine occasions. In , Iceland marked their fourth consecutive non-qualification when Ari Ólafsson and the song "Our Choice" placed 19th and last in the first semi-final, standing as the country's worst result at the contest. Iceland made its return to the final in , with Hatari and the song "" placing 10th with 232 points and bringing the nation back into the top 10 for the first time since 2009.
The Icelandic national broadcaster, (RÚV), broadcasts the event within Iceland and organises the selection process for the nation's entry. The Icelandic broadcaster has used various methods to select the Icelandic entry in the past, such as internal selections and televised national finals to choose the performer and song to compete at Eurovision. Since 2006, RÚV has chosen its entry for Eurovision through , a televised music competition; this method was used ahead of the 2020 contest, the winner of 2020 being Daði og Gagnamagnið with the song "Think About Things". The 2020 contest was subsequently cancelled due to the rapid spread across Europe of the coronavirus disease 2019 (COVID-19); shortly afterwards the European Broadcasting Union (EBU) confirmed that entries for the 2020 contest would not be eligible for the next edition in 2021. In September 2020, RÚV confirmed its intention to participate in the 2021 contest, subsequently announcing on 23 October 2020 that Daði would remain as the nation's Eurovision entrant.
Before Eurovision
Internal selection
Concurrently with confirming that Daði would represent Iceland in the 2021 contest, RÚV announced that their song for the contest would also be chosen internally, meaning that for the first time since , Iceland's traditional national selection process would not be held. The announcement came soon after Daði Freyr announced changes to his already-confirmed European tour in 2020 and 2021, with many dates shifted due to the ongoing COVID-19 pandemic, including changes for the May 2021 dates that would allow him to perform at Eurovision. In an interview with NME in November 2020, Daði shared the process for writing his new Eurovision entry, stating that from around 11 rough demos he had been working on, he would subsequently focus on one for the contest. By the end of December 2020, Daði confirmed through his Twitter account that the lyrics for the entry had been completed.