England now lie in wait for Lars Lagerback's underdogs, who made the knockout stages in breathtaking fashion thanks to Arnor Traustason's last-minute winner.
An incredible 2-1 win over Austria ensured Iceland a place in the last 16, keeping the islanders' fairytale going in Euro 2016.
Needing a point to advance from Group F, the tournament debutants once again showed their iron will in defence - that had notably thwarted Cristiano Ronaldo and Portugal in the opening week - to keep out a swarming Austrian front line.
Austria had their chances, but Aleksandar Dragovic's first-half penalty miss, after Jon Bodvarsson had put Iceland ahead, will be looked back on ruefully.
Alessandro Schopf equalised after the interval and Austria spent much of the second half camped in opposition territory, but stout defence and Traustason's counter-attacking effort gave the travelling hordes from Iceland a moment to savour.
Austria, who were backed to make a strong showing at Euro 2016, exit the competition after picking up one point from their three group games, in which stars like David Alaba and Marko Arnautovic struggled to make an impact.
Iceland are unbeaten in the competition and have only lost one of their last nine competitive matches in a run of form that leaves England with no room for complacency as they meet a team who are entering unchartered territory under the guidance of Lars Lagerback and Heimir Hallgrimsson.
Perhaps expected to sit back from the off, Iceland signalled their intent when a 25-yard rocket from Johann Gudmundsson rattled the left-hand post in just the second minute, and Austria struggled to settle into the game as their opponents dictated the pace.
A momentary lapse from Hannes Halldorsson almost allowed Marko Arnautovic to dispossess him in the six-yard box, but a desperate challenge from the goalkeeper denied the Stoke City striker.
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