This study employs the method of case study to explore the financial supervisory policies of Iceland government under financial crisis. The findings are as follows: Re-emphasize the importance of central banking, adjust the financial-related regulatory stipulations, re-strengthen the financial supervision, protect and re-educate the investors, re-adjust the compensation scheme for management of banks, establish the well ordered mechanisms for settlement and exit , information revelation, share supervisory information, re-strengthen the international cooperation of financial supervision. For the Iceland, the suggestions include to highlight the problems of liquidity, to charge the central bank with the responsibility of financial stability, to highly value the systematic risk, to strengthen the supervision and internal audit of financial institutions, to set up consumer protection institutions, to reinforce the propaganda of finance-related knowledge, and to adopt the optimal economic policies.