The European Championship debutants were heavily unfancied in the Group F encounter in Saint-Etienne and the pre-game predictions appeared a formality when Nani put Portugal into a half-time lead in an opening 45 minutes that they largely controlled.
But Iceland hit back after the break as Birkir Bjarnason became the first player from his country to score at a major tournament.
Portugal applied heavy pressure late on but a fine defensive showing ensured the spoils were shared and left Hallgrimsson fulsome in his praise for a well-executed game plan.
"It was down to team work. You can't put one player to stop players like Cristiano Ronaldo," he said.
"It's just good organisation, moving from right to left. We're not one player, we needed lots of players marking Ronaldo.
"It was a really good job by the lads. The zonal marking was perfect for us today. We were sloppy on the wings at times, they had a few good crosses, but otherwise quite good."
A win in their second group-stage game against Hungary would leave Iceland well placed to reach the knockout stages, and Hallgrimsson admits that taking an unexpected point eases the pressure in that match.
"I don't think that the other game [Hungary's 2-0 win over Austria] affected us so much, but it's really good to have a point," he added.
"The big nations say 'don't lose the first game'. It's the same for us. We can relax into the next game but a win versus Hungary means we are almost there.
"It's a great feeling to have. Just to get a point versus the best team in the group should be a confidence boost, but the result of Austria versus Hungary doesn't affect how we think or play the next game."