Post-colonial scholars have emphasized the need to explore the ways in which colonial contact shaped both the colonized and colonizers; that is, how European identities were formulated in relation to imperial projects. Colonial Europe itself has to be deconstructed, looking at similarities and variability within different countries. This article explores the construction of 'white' Icelandic identity in historical and contemporary discourses. The article shows that even though Iceland did not participate directly in the nineteenth century colonial project, the interwoven racial, gendered and nationalistic ideologies associated with the colonial project were very much a part of Icelandic identity in the nineteenth and early twentieth century as shaped by parallel discourses in Europe. Analysis of contemporary blog sites reflects the increasingly complex manifestations of racism in contemporary Iceland. Whiteness continues to be invisible as a position of power to many contemporary Icelanders. Interestingly, despite being few in numbers in Iceland, Muslims are increasingly constructed in the media as a threat in a similar way as in the rest of Europe.