Icelandic is, and has been, spoken in Iceland since the time of the first settlers. It is a North Germanic language, related to Danish, Swedish, and Norwegian, but unlike them retains the full set of conjugations and declensions that Old Norse had. Its stubborn resistance to change and its lack of Latinate words make it a difficult language for English speakers to comprehend and learn. On the other hand, speaker of German will find many elements of Icelandic grammar familiar, as both languages retain various conjugations and declensions from Proto-Germanic, which have been lost in other Germanic languages.
Iceland has been a very isolated and linguistically homogeneous island historically, but a case could be made that it has nevertheless beheld several languages. According to ancient texts Irish monks settled on the island sometime in the 8th century, they sought the isolation which made it a perfect place for their hermit lifestyles. Because of this Gaelic could be argued to have been the first language spoken in Iceland, however, these monks had no intention of settling in Iceland to make a life for themselves and future generations, they were not permanent settlers. Amongst the first permanent settlers were some Irish slaves who spoke Gaelic but the Icelandic or Norse language of the Vikings prevailed absorbing only a few of the distinctly Gaelic features.
Close contact was always maintained with the Danish and Norwegian kingdoms resulting in the union of Iceland under Denmark in 1380 which lasted to 1918 when Iceland achieved self-rule.
However Icelandic remained the spoken and written language of Icelanders throughout this period none the less.
The Danish rule of Iceland had very little effect on the evolution of Icelandic, which remained in daily use among the general population except for a period between about 1700 and 1900 where the use of Danish by common Icelanders became popular. The same applied to the Allied occupation of Iceland when English became widely known.
Icelandic is constantly evolving as a language and new words are invented to cover technological developments and slang. The Icelandic vocabulary is extensive, it contains many words and personal names that have been adapted to the languages linguistic parameters throughout the ages.
As Iceland became Christian in the year 1000, a decision made by the contemporary parliament of Iceland, this had an effect on the religious vocabulary of the Icelandic language and new words were absorbed.
By the 13th and 14th centuries northern trade routes brought the German, English, Dutch, French and Basque languages into Iceland. Some merchants and clergymen from these countries settled in Iceland throughout the centuries, leaving their mark on culture, but linguistically their effect was mainly felt through the addition of trade, nautical or religious terms to the Icelandic language.
Excluding the specialized trade and craft related words which have been incorporated into the language through communication with Western Europe and the few Latin theological and religious based words, Icelandic vocabulary has altered remarkably little since settlement.
Icelanders have always been proud of their native tongue and literacy has been high on the island since the early middle ages. The oldest preserved texts in Icelandic were written around 1100 AD though they may not have been the first written, only the oldest to survive. Manuscripts continued to be made in Icelandic from then on and with the advent of the printing press Iceland became a nation closely connected to books. Much of the material preserved in the oldest, medieval texts are based on Viking age poetry and laws such as those governing Althingi which were traditionally preserved orally.
The most famous of the texts written in Iceland in the late 12th century is the Prose Edda and the Icelandic Sagas. They comprise historical works recounting the first 300 years of the history if Iceland from the settlement to the time of the books author and the enigmatic Eddic poems.
The language of the Icelandic Sagas is Old Icelandic, a western dialect of Old Norse and written Icelandic has changed little since the 13th century. Modern speakers can understand the original sagas and Eddas with the merest modicum of training though this ability is sometimes overstated. The Sagas which are taught in the Icelandic primary schools are usually read with updated modernized spelling and footnotes but are otherwise intact similar to the modern English works of Shakespeare.
The modern Icelandic alphabet has developed from a standard established in the 19th century primarily by the Danish linguist Rasmus Rask.
It is ultimately based heavily on an orthography laid out in the early 12th century by a mysterious document referred to as The First Grammatical Treatise by an anonymous author who has later been referred to as the First Grammarian. The later Rasmus Rask standard was a re-creation of the old treatise, with some changes to fit concurrent Germanic conventions, such as the exclusive use of k rather than c.
Various archaic features, as the letter ð, had not been used much in later centuries. Later 20th century changes include the use of é instead of je and the removal of z from the alphabet in 1973.