The previous smallest country to have reached a World Cup was Trinidad & Tobago, in 2006, which had 1.3 million people.
The penultimate night of the UEFA World Cup Qualifying rounds was largely bereft of both goals and entertainment value for long periods.
Iceland's unique celebrations are as striking as their on-pitch achievements, and they did not disappoint after booking their place at next summer's World Cup.
The result guaranteed their spot at the 2018 World Cup as group winners and continued their remarkable run of recent success at global level.
Both Iceland and Eygpt did the inevitable with wins over Kosovo and Congo to qualify for the all-important FIFA World Cup 2018 in Russian Federation.
Fireworks lit the sky in Reykjavik following the final whistle after Gylfi Sigurdsson in the 41st minute opened the scoring and provided the cross for Johann Gudmundsson to score in the second half for an historic victory for the home side.
The Thunder-Capping islanders from the North Atlantic will be comfortably the smallest nation to ever qualify for a World Cup - population wise, if not physically.
Group rivals Italy, already guaranteed second place and a playoff spot, won 1-0 in Albania.
"We appreciate that people want us to do well and we hope we can repay their support in Russian Federation at the World Cup".
Meanwhile, Croatia saw off the threat of Ukraine in Kiev to claim a 2-0 success and finish runners-up with a brace from Hoffenheim striker Andrej Kramaric seeing them through.
With Serbia winning 1-0 over Georgia to top Group D, the showdown in Cardiff was for the prize of a playoff berth in November.
Qualification across the regions concludes today, before the play-offs within each confederation and inter-confederation play-offs take place next month.