The former Monaco striker believes a mixture of youth and experience in Lars Lagerback's side bodes well for the future as the nation prepares for a momentous clash with Croatia
The 35-year old has Premier League, La Liga and Champions League medals in his extensive collection, but believes a win over Croatia in their play-off clash would be a truly proud moment for himself and the island nation.
"I think now is the closest that we've been [to the World Cup], not only in my international career but in Iceland's history," he said in an interview with The Independent. "It is still a distant dream but it is not so distant anymore.
"It will probably be like playing a cup final, or a game to win the Premier League because it is such an amazing achievement for us.
"I am very proud of what I have achieved in my career. Let's add the World Cup to a list of honours that I am very proud of."
Gudjohnsen has also hailed the "amazing transition" led by coach Lars Lagerback, and has described the current squad as a "golden generation" as the likes of Tottenham's Gylfi Sigurdsson, Kolbeinn Sigthorsson of Ajax and Alfred Finnbogason of Heervenveen prepare for Friday's encounter.
"We have found a great mixture of youth, talent, experience and having the natural strength that we have always had," he said.
Over 10 per cent of Iceland's population applied for tickets to the game - some three times the capacity of the 10,000 seater Laugardalsvollur stadium - and Gudjohnsen confesses the nation has been gearing up for the clash for weeks.
"People have been counting down to this game since the Norway game, it has been like counting down to Christmas. It is really exciting time," he added.
"We have raised eyebrows, we have made people aware of Iceland and people are taking notice."
Croatia have won the previous two encounters between the two sides, scoring seven and conceding just once.