Holders Germany crashed out and the Netherlands became the first side to book their place in the play-offs as group winners on a night of contrasting fortunes in qualifying for the 2011 UEFA European Under-21 Championship.
Only 14 months after lifting the trophy with a 4-0 win against England in the final, Germany travelled to Iceland needing victory just to keep alive their hopes of claiming a place in the play-offs as one of four best runners-up. They did not get it as Iceland romped to a 4-1 victory that left their coach Eyjólfur Sverrisson beaming.
"We played to win but I did not expect us to do so so comfortably," he said. "
Our plan was to put pressure on the Germans from the start, to surprise them and it worked." A disconsolate Germany coach Rainer Adrion said: "This was supposed to be a fresh start, but due to our carelessness this horrific result was the outcome. We made too many mistakes in defence and our attacking game was poor. Of course it's a disappointment that we failed to qualify for the EURO."
Iceland have now scored a competition-leading 28 goals and sit second behind the Czech Republic, who maintained their perfect record with a 5-0 rout of San Marino. They will win the group should they beat Germany in their next game on 3 September.
The only other country still boasting a perfect record are the Netherlands, who sealed their place in the play-offs as Group 4 winners with a 3-0 victory in Liechtenstein. Their nearest challengers, Spain, could only draw 1-1 in Finland, leaving them needing to claim one of the four best runners-up spots if they are to reach the finals in Denmark.
Russia and Romania both won, against Latvia and Moldova respectively, to stay level at the top of Group 1. The pair conclude their campaigns with matches home and away against each other on 3 and 7 September. Things are also tight at the top in Group 8, where Belgium moved into a share of the lead with Ukraine, though they have played a game more, after beating France 1-0 courtesy of Benjamin Mokulu Tembe's eighth-minute strike.
Five-times winners Italy could also go the same way as Germany after slipping to third in Group 3 following Hungary's 2-0 win in Bosnia and Herzegovina. Wales lead the section on 13 points with Hungary one behind and Italy two further adrift.
Croatia are top in Group 7 after beating Norway 4-1 and Slovakia are now best placed to challenge them for top spot after defeating Serbia 2-1 to keep within two points of the leaders, Jakub Sylvestr getting both goals. Belarus, meanwhile, battled back from 3-1 down to claim a point away to Group 10 pacesetters Austria, Dmitri Rekish striking twice in the final 15 minutes to earn a 3-3 draw. Austria are still top on 14 points, but Scotland and Belarus are just one behind.