The fourth Wales goal fuelled an already jubilant atmosphere at Cardiff City Stadium, where fans chanted "Montenegro" as well as celebratory songs about their own team.
Victory means Bellamy remains unbeaten in his six games so far as Wales head coach, and the result has implications for next year's World Cup qualifying campaign.
Winning their group enhances Wales' chances of securing at least a play-off spot, while avoiding the Nations League play-offs means their bid to reach the 2026 World Cup in the United States, Canada and Mexico could start as early as March.
When Bellamy was appointed in the summer, he declared that getting Wales to the World Cup was his ultimate goal.
While the former Liverpool and Manchester City forward said the primary aim for this Nations League campaign was to prepare for World Cup qualifying and instil a clear playing identity, securing promotion to the top division at the first attempt represents a significant achievement in itself.
Had Wales not won Group B4, they would have faced a Nations League promotion play-off in March, meaning their World Cup qualifying campaign would be pushed back to June or September next year.
What Wales were not contemplating was a home defeat against Iceland which would consign them to third place and a relegation play-off.
However, just seven minutes in, that possibility was staring them in the face as Iceland took an unexpected lead.
Ward did superbly to claw away a header from the unmarked Oskarsson but Gudjohnsen – son of former Chelsea forward Eidur – reacted quickly and drilled a low shot between the Wales keeper's legs.
That was the first goal Wales had conceded at home for 321 minutes, a run stretching back to their 4-1 thrashing of Finland in their Euro 2024 play-off semi-final in March.
This was also the first time Wales had fallen behind under Bellamy.
They responded well and, despite some uncertain moments in defence, Wales were level 25 minutes later as Johnson's curling left-footed cross from the right was glanced in by Cullen.