Belgium secured the last quarter-final spot at the Euro 2022 with a 1-0 win over Italy on Monday.
The Hoffenheim striker Tina De Caigny’s goal in the second half ensured her side of second place in Group B behind France to set up a last-eight meeting with Sweden on Friday.
This will be Belgium’s first knockout stage appearance.
“This is a historic night for Belgian women’s football,” said Belgium coach Ives Serneels.
For Iceland, a 1-1 draw against France was not enough to progress. They bowed out of the competition despite finishing the group stage unbeaten.
France fielded a heavily-changed line-up in order to keep the reserves for their last eight clash with defending champions the Netherlands on Saturday.