The former history professor won his second four-year term in the largely symbolic position in Saturday's vote, the second election held by a European country after coronavirus lockdowns were lifted.
Since suffering spectacular bank failures in 2008, the volcanic North Atlantic island of 365,000 inhabitants has recovered some economic and political stability, which worked in the 52-year-old independent's favour.
The final results showed he took 92.2 percent of the 168,821 votes cast, crushing rightwing challenger Gudmundur Franklin Jonsson.
"I am honoured and proud," the president told AFP in Reykjavik on election night.
"This result of this election is, to me, proof of the fact that my fellow Icelanders... have approved of how I have approached this office."
The dominant win had been predicted by opinion polls, which had shown the president winning between 90 to 94 percent.
Voter Hjalmtyr Heiddal told AFP on Sunday that he "very happy" with the winning margin because "it means that 92 percent of Icelanders want this type of president who does not take sides and is simply neutral."
It is the second-highest margin of victory in the history of Iceland's presidential elections.
Vigdis Finnbogadottir, the first woman in the world to be democratically elected as head of state, holds the record, winning re-election in 1988 with 94.6 percent of the vote.
