Icelandair will operate out of London Heathrow Terminal 2 from March 25.
The carrier, which is currently located in Terminal 1, flies twice daily service from the UK capital to Reykjavik and then on to 14 gateways in the US and Canada.
The airline will next month begin a twice-weekly service to Birmingham (see news, April 2014).
Andres Jonsson, Icelandair's UK general manager, said: "This move to Terminal 2 is great news for our passengers as they will get an even higher quality of service in a brand new state of the art terminal.
"We are investing in our on-board experience too with wifi being installed across our fleet to enhance the passenger journey.
"Icelandair continues growing its route network in 2015, with more frequencies to several destinations including starting flights from Birmingham airport to Iceland in February and from Iceland to Portland, Oregon in May. Birmingham will be the 5th airport in the UK with an Icelandair service. Portland will become Icelandair's 14th North American destination."
Heathrow's new Terminal 2 was opened by the Queen last summer (see news, June 2014).