Internet á Íslandi hf. (ISNIC) was founded in 1995 to operate the Icelandic Internet (ISnet). ISNIC was established on the basis of two informal organizations (SURIS and ICEUUG) that had been running the network since Iceland's networking connections where established in 1986. These initial connections to the European EUnet network were run under the auspices of the University of Iceland and the Icelandic Marine Research Institute.

The Icelandic network grew rapidly and by 1995 the members of the above organizations decided that the network's operation needed to be established in a formal manner. The network was, at this time, used by all Internet users in Iceland, including the Universities and the rest of the educational system, the government, largest companies banks etc. Most of the user companies and institutes became shareholders in the new company with shares allocated according to the volume of their business with ISNIC. Internet á Íslandi hf. grew rapidly during its first years of operation as the only Internet Service Provider (ISP) in Iceland. ISNIC was Iceland's first member of RIPE, was allocated the first IP addresses in Iceland (130.208.0.0/16), the first Autonomous System number (1850) and inherited the management role for the .IS ccTLD, which had been delegated to SURIS in 1988 by IANA.

By the year 2000 Internet á Íslandi hf. was still the biggest ISP in Iceland (over 200 corporate customers, with points of precence in Reykjavík, Keflavík, Akranes and Akureyri and transatlantic connections to Stockholm and New York), but faced competition from the incumbent government phone company, and various other nascent ISP's. The largest shareholders of ISNIC at the time (The University of Iceland and the Icelandic government) decided to sell their stakes in ISNIC in 2001 to a newly established communications company, Íslandssími (which later became Vodafone Iceland). The new owner merged ISNIC's networking operation (which accounted for about 90% of the company) with their own network and in 2001 ISNIC was restructured as a smaller company responsible for the .IS ccTLD management and the operation of Iceland's only, at the time, open internet exchange point (Reykjavík Internet EXchange - RIX).

In 2007, Internet á Íslandi hf. was acquired by a group of investors and subsequently merged with Modernus ehf. the operators of the icelandic coordinated webmeasurement system.

Today ISNIC concentrates on two core compentencies; (1) Operating the .IS ccTLD (country-code Top-Level Domain) and (2) Operating the Reykjavik Internet Exchange .

ISNIC and it's forerunners have registered .IS domains from 1988, from the registration of the first few of domains e.g. hi.is, os.is and hafro.is, to over 40000 domains today. .IS was one of the first ccTLDs to have a completely automated registration system, established in 2001. ISNIC maintains the security of its domain registration by insisting on correct and up-to-date information on all registrants and all domain contacts, and by making registration of .IS domains dependent on well defined technical requirements. These requirements are validated before registration, and at regular intervals after registration. Registration of domains that do not fulfill these requirements is revoked, thus maintaining the overall quality of the .IS domain names.

The registration of .IS domains is backended by a set of nameservers for .IS distributed around the world. These nameservers are synchronized every 20 minutes with the authoritative set of .IS delegation records.

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The Reykjavik Internet Exchange is an open internet exchange point in Iceland and is located at ISNIC headquarters in Katrínartúni 2, in Tæknigarði on the University of Iceland campus and Múlastöð, Ármúla 25. RIX is a minimal, very simple exchange with the expressed purpose to be inexpensive and highly reliable. There are currently 30 Autonomous Systems (ISP's) connected, including all major ISP and hosting companies in Iceland.

ISNIC's timserver was activated and registered with ntppool.org in 2012.

ISNIC has hosted services for partners to increase the DNS reliability in Iceland and for .IS.

In 2003 an instance of the K-root was connected to the RIX.

Since 2016 ISNIC has hosted an instance of the Verisign's J-root/gTLD anycast servers. Doing so increases the reliability and speed of gTLD DNS services in Iceland.

In 2017 a Netnod node was installed it hosts I-root and ccTLD anycast servers (including .is).

In 2021 a PCH node that serves the D-root for University of Maryland, E-root for NASA, Quad9 open recursive resolvers and anycast for more then 130 ccTLDs (including .is).

In 2022 ISNIC started hosting a RcodeZero DNS anycast node for more then 25 ccTLDs (including .is) that NIC AT runs.

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