The Icelandic population has been sampled in many disease association studies, providing a strong motivation to understand the structure of this population and its ramifications for disease gene mapping. Previous work using 40 microsatellites showed that the Icelandic population is relatively homogeneous, but exhibits subtle population structure that can bias disease association statistics. Here, we show that regional geographic ancestries of individuals from Iceland can be distinguished using 292,289 autosomal single-nucleotide polymorphisms (SNPs). We further show that subpopulation differences are due to genetic drift since the settlement of Iceland 1100 years ago, and not to varying contributions from different ancestral populations. A consequence of the recent origin of Icelandic population structure is that allele frequency differences follow a null distribution devoid of outliers, so that the risk of false positive associations due to stratification is minimal. Our results highlight an important distinction between population differences attributable to recent drift and those arising from more ancient divergence, which has implications both for association studies and for efforts to detect natural selection using population differentiation.