Women's Nations League: Iceland 1-0 Wales - Glodis Viggosdottir header the difference
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Highlights: Iceland 1-0 Wales
Iceland captain Glodis Viggosdottir headed home the only goal as Wales began their inaugural Women's Nations League campaign with defeat.
Gemma Grainger's side dominated the first half, but slack defending from a corner allowed an unmarked Viggosdottir to head in from a few yards out.
Carrie Jones had Wales' best chance of the first half, but Telma Ivarsdottir got down quickly to make the save.
Defeat leaves Wales third in League A3, above Germany on goal difference.
Wales boss Grainger went with a tried and tested starting 11, with Rachel Rowe the only player on the substitutes' bench who would have likely started if fully fit.
The midfield trio of Jess Fishlock, Angharad James and Sophie Ingle combine for over 300 caps, and they helped Wales start on the front foot, with Fishlock firing an effort over within two minutes and Kayleigh Green heading a corner over.
Green then looked to lob Ivarsdottir from distance, but the Wales striker hesitated before taking the shot and the Iceland goalkeeper got back to see the ball drift harmlessly wide.
The hosts grew into the contest midway through the first half and Dilja Zomers fired a long-range effort across the face of goal with Iceland's first chance.
Ivarsdottir was called into action minutes later when Green laid the ball off for Jones on the edge of the area and her deflected shot required a smart save from the Iceland goalkeeper.
Iceland almost went ahead when an error from Lily Woodham allowed Hildur Antonsdottir to drive into the Wales box, her cross across the face of goal was not dealt with by Olivia Clark but Rhiannon Roberts did excellently to deny Sandra Jessen at back post.
But minutes later Iceland had the breakthrough.
After winning a controversial corner, centre back Viggosdottir was left completely unmarked by the Wales defence and headed home from close range to the delight of the home crowd in Reykjavik.
Replays suggest Wales were unlucky to have conceded the corner, with the last touch potentially coming off Hlin Eiriksdottir for a goal-kick instead, however the defending was sloppy.
The first change of the game was for the officials, as referee Katalin Kulcsar limped off the field and fourth official Eszter Urban took over.
That delay stopped the momentum of what had been a very entertaining game, and chances were at a premium for the rest of the first half.
The only significant chance came in first-half stoppage time, when Roberts' headed cross was not dealt with by Ingibjorg Sigurdardottir, however Jones could not generate enough power to beat Ivarsdottir from close range with her first-time swivelling shot.
Iceland captain Glodis Viggosdottir plays her club football for Bayern Munich
The second half was a more even contest, with Iceland starting brightly and looking to exploit Wales on the counter-attack.
Selma Sol Magnusdottir was the first to fire wide after a good five-minute spell for hosts before Viggosdottir saw another effort from a corner kick blocked.
But Wales absorbed the pressure well before once more taking control of the game, substitute Rachel Rowe making a positive impact for the visitors.
Wales' dominance increased as the second half wore on, but they failed to test Ivarsdottir.
Their best chance fell to Ceri Holland, but her shot from the left of the penalty area was deflected behind for a corner after more good work from Jones.
Rowe continued to be a bright spark after coming on, but she also saw a chance from a good position deflected behind after a neat one-two with Elise Hughes.
Wales threw everything at it in the final four minutes of stoppage time, but the Iceland defence held firm on what was a frustrating start to the Nations League for Grainger's side.
The other game in League A3 saw top seeds Germany lose 2-0 to Denmark - who Wales face at Cardiff City Stadium on Tuesday evening.
That result means Wales end the first round of games in third, with Iceland second behind Denmark on goal difference.
Wales manager Gemma Grainger said:
"There's a real feeling of frustration. We dominated the game but what we've learned is that when you play top teams the fine margins matter.
"So to conceded from a set-piece was disappointing but that's the reality of playing higher ranked sides.
"We played well, had plenty of possession and created chances but it's that final touch in the top third of the pitch that we need to improve for Tuesday (against Denmark)."