The National and University Library of Iceland opened in the present building in 1994 following the merger of the two largest libraries in Iceland. Both these libraries have a long history, the National Library being founded in 1818 and the University Library formally instituted in 1940.

The decision to merge the two libraries was made back in the late 1950's because at the time it was considered inefficient to develop two large research libraries in Iceland. Initially the intention was to open the library in a new building on the 1100th anniversary of the settlement of Iceland, in 1974. Due to many obstacles and lack of state funds construction was delayed and the actual groundbreaking did not take place until 1978. Construction went well and in 1984 the building looked more or less as it does now. However, a considerable amount of money was still needed for the indoor furnishings and so it was not until December 1, 1994 that the building finally opened to the public.

When it opened the building provided much-needed modern facilities for conservation and research and vastly improved work spaces for university faculty and students. Since then it has remained a popular place for study and research for the University as well as for the general public.