The key to dressing for Iceland’s climate is layering, regardless of season. Lightweight woolens, rain- and windproof jacket & trousers, and good walking/hiking shoes are essential if you plan to do any touring in nature.
When traveling to Iceland in winter you should bring along a warm overcoat, hat, scarf, gloves, socks (preferably made of wool) as well a sweater and/or cardigan, and weatherproof shoes. Long thermal underwear (a shirt and pants), a layer of fleece on top.
In summer, carry a light, and preferably water-resistant, jacket.
As trails are not common, sturdy walking shoes for trekking & hiking are needed. Else comfortable sneakers are convenient. Sometimes even rubber boots can be of use.
Good to bring casual clothes for going out.
Always bring a bathing suit! Icelanders’ favorite pastime year-round is outdoor swimming in the countless geothermally-heated pools and lagoons.
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