This article summarizes project parameters and technical requirements of the Norðfjörður tunnel, located on the east cost of Iceland. Purpose of the project is to provide shorter and safer connection between the villages of Eskifjörður and Neskaupstaður (where a regional hospital is located) on the Route 92. Excavation of the tunnel was carried out by the Drill & Blast method; it passes through basaltic rocks that contain layers of tuff and other non-cohesive pyroclasts. In the hard rock environment primary lining consists of fibre-reinforced shotcrete and rock bolts. In the noncohesive parts where several stability problems were encountered excavation was carried out by a modified version of the New Austrian Tunnelling Method with single-pass lining; reinforcement consists of steel arched trusses (BRETEX type) and a thicker layer of shotcrete.