Basal sediments of Lake Torfadalsvatn, northern Iceland, record changes in terrestrial and limnic environments in the period 11,300-9000 14C yr B.P. These changes were probably forced by climate and connected with displacements of the marine polar front and sea-ice margin. Pollen, spores, green algae (Pediastrum), saturation isothermal remanent magnetization, and carbon content of the basal sediments provide the first detailed biostratigraphic record of the last glacial-interglacial transition in Iceland. During the first pioneer phase, beginning at ca. 11,300 14C yr B.P., grasses and fell-field herbs became established, and lake productivity was very low. At ca. 10,900 14C yr B.P., climatic and soil conditions became favorable for shrubs and dwarf shrubs. This change, together with increased limnic productivity, clearly indicates long seasons without ice-cover in the sea immediately north of Iceland. A return to a colder climate (Younger Dryas), probably in connection with a southward displacement of the marine polar front, occurred by 10,600 14C yr B.P. Shrub and dwarf-shrub vegetation disappeared, and limnic productivity diminished. A second pioneer vegetation phase, dominated by Oxyria/Rumex and grasses, was initiated by a change to longer seasons without sea ice at ca. 9900 14C yr B.P. This warming is also evident as a contemporaneous increase in lake productivity. After ca. 9400 14C yr B.P. the reestablishment of dwarf-shrub heaths and very high limnic productivity indicate further warming.