Defender Lee Wilkie's first goal for Scotland presented manager Berti Vogts with his first Hampden Park victory and gave his nation's hopes of reaching the Euro 2004 championships a huge boost in the process.
On this showing, the Scots will not get the better of future opponents Germany to win the group but this win means Iceland have little chance of snatching the runners-up spot, the gateway to the play-offs that the Scots are likely occupy after all the games are completed.
This was more of a Meeting of the Mediocre than a Clash of the Titans but the Scots pocketed three vital points thanks to Wilkie after they had allowed Eidur Gudjohnsen to cancel out Kenny Miller's early opener.
Miller's CV is already an unusual one as it boasts a sackful of goals at current club Wolves, with 15 having been netted in the last 15 games there, and at the tender age of 23 he has been the subject of two seven-figure transfers.
But he had also become all-but invisible in the eyes of two international managers - Vogts, until this game, and Holland's Dick Advocaat, the man who had paid big money to lure him to Rangers from Hibernian and then largely ignored
him.
Before kick-off here, his only experience for his country at the highest level had been the 10 minutes afforded him by Craig Brown in a friendly in Poland two seasons ago.
But as the Scots had been so lacklustre up front in their previous game - a 2-0 Hampden canter for Ireland - Vogts was clearly willing to gamble on a player he had previously left kicking his heels on the bench and within 11 minutes it had paid off.
Strike partner Stevie Crawford was the man who started the move by sending Graham Alexander away down the right.
There were plenty of defenders in the box when the Preston man sent a square ball slightly behind Miller but when you are hot you are hot and Miller was able to deflect the ball past goalkeeper Arni Arason with aplomb.
Iceland manager Atli Edvaldsson had claimed beforehand that his players had little chance of beating the Scots and his players' first-half performance certainly bore that out as they failed to threaten Robert Douglas' goal even once.
The nearest they came was when 37-year-old Gudni Bergsson came forward and was challenged first by Don Hutchison and Steven Pressley, with the Hearts man managing to win the ball and boot his team-mate up the backside at the same time.
Arason was hardly over-worked at the other end either but did have to make a smart save just before half-time when Gary Naysmith headed an Alexander cross goalwards off the turf.
Pressley was booked for bizarrely opting to punch the ball into touch as Gudjohnsen challenged and Ivar Ingimarsson was almost punished more harshly a few minutes later when he too made the oddest of decisions.
Naysmith had floated a cross in from the left and the Brighton man looked intent on tipping it away with an outstretched arm. Whether he made contact was debatable but Hutchison was soon appealing for a spot-kick, with Arnar
Vidarsson's grabbing of his arms extra evidence in his case.
Dutch referee Rene Temmink was not interested, however, and the Scots had to be content with a 1-0 lead from a scrappy half they had nonetheless dominated.
But all that good work was wiped away within three minutes of the restart when Pressley made a mess of an attempt to catch Gudjohnsen in the offside trap.
Joey Gudjonsson sent a long ball over the top and as the Chelsea man sprinted away to loft the ball over the advancing Douglas, Pressley was appealing in vain for a raised flag that would never arrive.
Wilkie almost headed the Scots back ahead straight away but was lucky at the other end when Gudjohnsen went down in the box when he pushed him in the chest.
The referee ruled it had been a foul but one punishable only by an indirect free-kick at the point where it was committed.
There was a real let off for the stunned Scots when Gudjohnsen climbed above Christian Dailly at the back post but with the goal at his mercy he headed across goal and wide.
Barry Ferguson tried his luck form outside the box and his effort was superbly struck, missing the beaten Arason's left-hand post by millimetres.
Hutchison's lack of match fitness had begun to tell and he was replaced in the 65th minute by Paul Devlin.
The substitute made an immediate impact by providing the cross for Wilkie after Dailly had taken a quick free-kick down the right.
Bergsson and Larus Sigurdsson were both positioned in the six-yard box but at six foot five inches the height advantage was with the Dundee defender and he produced an emphatic header to put his side back in front in the 71st minute.
Crawford was booked for a challenge on Arnar Gretarsson that was too robust for the referee's liking, although the striker had won the ball.
Iceland substitute Indridi Sigurdsson soon followed for hacking down Devlin.
By that point Scotland had taken Miller off and sent midfielder Jackie McNamara on in a bid to tighten things up in the final minutes.
It worked, but only just, and the Scots recorded a vital, if shaky, victory to take to Lithuania for the second part of the double header on Wednesday night.
Teams
Scotland Douglas, Wilkie, Pressley, Dailly, Graham Alexander,
Ferguson, Lambert, Hutchison (Devlin 66), Naysmith,
Miller (McNamara 82), Crawford.
Subs Not Used: Gallacher, Malcolm, Cameron, Gemmill, Gray.
Booked: Pressley, Crawford, Lambert.
Goals: Miller 12, Wilkie 70.
Iceland Arason, Thorsteinsson, Larus Sigurdsson, Bergsson,
Gunnarsson (Thordur Gudjonsson 74), Runar Kristinsson,
Johannes Gudjonsson, Ingimarsson,
Vidarsson (Indridi Sigurdsson 83), Gudjohnsen (Gudmundsson 89),
Gretarsson.
Subs Not Used: Birkir Kristinsson, Marteinsson, Einarsson,
Baldvinsson.
Booked: Indridi Sigurdsson.
Goals: Gudjohnsen 48.
Att: 37,548
Ref: Rene Temmink (Holland).