With two legs coming up against Niko Kovac's team, the minnows are unlikely to make it through to the World Cup in Brazil next year
The Nordic island country takes on Croatia over two legs in the pick of the four European play-off ties, with the first leg of those ties to take place on Saturday morning (Australian time).
The eight teams involved are those that finished second in their respective European groups with the other ties featuring Portugal against Sweden, Greece against Romania and Ukraine against France.
However it is Iceland's unlikely tilt at history that is set to attract the most betting interest, with the country having a population of less than 325,000 yet being on the verge of being part of the world's biggest sporting event for the first time.
Iceland, ranked 46th by FIFA, have yet to qualify for even the European Championships but get their shot at the play-offs after finishing second in Group E behind Switzerland.
Led by English Premier League stars Gylfi Sigurdsson (Tottenham) and Aron Gunnarsson (Cardiff), Iceland have home advantage in the first leg on Friday night before heading to Croatia for the return leg next Tuesday night.
However against the 18th ranked Croatians - whose team features the likes of Bayern Munich striker Mario Mandzukic and Real Madrid playmaker Luka Modric - Iceland faces a big task.
Croatia have been installed as the dominant $1.16 favourites at bet365 to qualify for the World Cup Finals over the two legs while Iceland are at $4.50.
And Croatia are even favourites to win the first leg on Friday night at odds of $2 compared to Iceland, which have drifted from their opening price of $3.60 to now $4 at bet365.
But with so much to play for, Iceland will be tough to beat at home in the first leg with the draw paying a tempting $3.25 at bet365.
On FIFA rankings at least, the Ukraine-France tie should be the closest tie given Ukraine at number 20 in the world are ranked just one place above the French at number 21.
But France were unlucky to be drawn in the same group as reigning World Cup champions Spain during qualifying and their wealth of talent - led by Bayern Munich superstar Franck Ribery and English based stars Olivier Giroud, Yohan Cabaye and Samir Nasri - was on full display in their recent 6-0 rout of the Socceroos.
It seems inconceivable that France, the 1998 World Cup winners and 2006 runners-up, will not make it to Brazil and they are the $1.30 favourites at bet365 to qualify compared to Ukraine at $3.40.
Ukraine have never beaten France in seven previous meetings and the French look good value to win the first leg away from home on Friday night at odds of $2.40 at bet365, with the home side priced at $3 and the draw at $3.20.
The closest tie from a betting point of view is Greece against Romania with the Euro 2004 winners Greece the $1.80 favourites at bet365 to qualify compared to $2 for 1994 World Cup quarter-finalists Romania.
But Greece conceded the equal second lowest number of goals in qualifying in Europe (four) and their defensive solidity is likely to prove the difference over the two legs.
Greece are the $2.05 favourites to win the first leg at home with Romania at $4.20 and the draw at $3 but for better value back Greece to win 1-0 at odds of $5.50 at bet365.
The remaining tie pits together Euro 2004 runners-up and 2006 World Cup semi-finalists Portugal against 1994 World Cup semi-finalists Sweden.
Portugal at 14 are ranked 11 places higher by FIFA and Sweden - despite the presence of one of the world's best strikers in their line-up in PSG star Zlatan Ibrahimovic look set to miss out on their second straight World Cup having also failed to qualify for South Africa 2010.
With the great Cristiano Ronaldo - who has scored 43 goals in 107 appearances for his country and the man widely regarded as the second best player in the world behind Argentina's Lionel Messi in their line-up - Portugal are odds-on to qualify at $1.50 at bet365 compared to $2.50 for Sweden.
And they are the shortest priced of any of the teams for the first leg meetings, paying just $1.72 at home with bet365 against Sweden at $4.75 with a first leg draw paying $3.60.
Ronaldo is the dominant $4 favourite at bet365 to score the game's opening goal and $2 to score at any stage while Ibrahimovic is the priced at $7 and $3.10 respectively in those markets.
*Note prices subject to change