Meteorologists say the last known eruption at Fagradalsfjall was about 800 years ago.
A volcano has erupted south-west of Iceland’s capital Reykjavik, the country’s meteorological office says.
It says the fissure is about 500-700 metres long (1,640-2,300ft) at Fagradalsfjall on Reykjanes peninsula. The last eruption there was some 800 years ago.
Iceland has recorded more than 40,000 earthquakes in the past three weeks.
In 2010, the eruption of another volcano, Eyjafjallajokull, brought air traffic to a halt across Europe.
However, the eruption of Fagradalsfjall is not expected to spew out much ash or smoke, so aviation should not suffer disruption.
The Icelandic Meteorological Office says the eruption of Fagradalsfjall began at about 20:45 GMT on Friday, and was later confirmed via webcams and satellite images.
A coastguard helicopter was sent to survey the area, about 30km (19 miles) from Reykjavik.
It then sent first images of the lava snaking its way down after the eruption.
“I can see the glowing red sky from my window,” said Rannveig Gudmundsdottir, who lives in Grindavik, 8 km (5 miles) from the eruption.
“Everyone here is getting into their cars to drive up there,” she said, according to Reuters news agency.
A magnitude 3.1 earthquake was recorded 1.2 km from Fagradalsfjall just several hours earlier.
Iceland frequently experiences tremors as it straddles two tectonic plates, which are drifting in opposite directions.