Previous attempts to investigate the origin of the Icelanders have provided estimates of ancestry ranging from a 98% British Isles contribution to an 86% Scandinavian contribution. We generated mitochondrial sequence data for 401 Icelandic individuals and compared these data with >2,500 other European sequences from published sources, to determine the probable origins of women who contributed to Iceland's settlement. Although the mean number of base-pair differences is high in the Icelandic sequences and they are widely distributed in the overall European mtDNA phylogeny, we find a smaller number of distinct mitochondrial lineages, compared with most other European populations. The frequencies of a number of mtDNA lineages in the Icelanders deviate noticeably from those in neighboring populations, suggesting that founder effects and genetic drift may have had a considerable influence on the Icelandic gene pool. This is in accordance with available demographic evidence about Icelandic population history. A comparison with published mtDNA lineages from European populations indicates that, whereas most founding females probably originated from Scandinavia and the British Isles, lesser contributions from other populations may also have taken place. We present a highly resolved phylogenetic network for the Icelandic data, identifying a number of previously unreported mtDNA lineage clusters and providing a detailed depiction of the evolutionary relationships between European mtDNA clusters. Our findings indicate that European populations contain a large number of closely related mitochondrial lineages, many of which have not yet been sampled in the current comparative data set. Consequently, substantial increases in sample sizes that use mtDNA data will be needed to obtain valid estimates of the diverse ancestral mixtures that ultimately gave rise to contemporary populations.