The pre-industrial natural carrying capacity is believed to have limited the human population in Iceland to a maximum of fifty to sixty thousand inhabitants. Since AD 1800 the Icelandic population has gradually grown up to nearly 300 thousand in 2005. In this paper a simple approach is used to evaluate the potential population size that the pre-industrial Icelandic environment could possibly sustain. A dynamic model was constructed that simulates the population size according to potential biological production available for livestock. Biological production was determined by the extent of the total potential vegetation cover based on the Degree-Day concept. Fluctuations in the mean annual temperature causes changes in the potential vegetation cover and as a consequence change the biological production sustaining livestock and ultimately human population. The simulation's results indicate that the potential population that the Icelandic environments could sustain during the pre-industrial period fluctuated between 40 and 80 thousand. The results further indicate that the severe land degradation experienced after the Viking settlement period in AD 900 had a marginal impact on the population size. The pre-historical population did however overshoot the natural sustainability on several occasions.