Selfoss falls under the municipality of Árborg. It is the largest residential area in south Iceland and is situated next to the Ölfusárbrú bridge. Selfoss was settled in 1891 when a hanging bridge was built across the Ölfusá river. At the time the bridge was the largest man-made structure in Iceland.
Around 1930 the town solidified when the Kaupfélag Árnesinga co-op and Mjólkurbú Flóamanna dairy processing plant began operations. Selfoss is the main centre of trade, services and industry in southern Iceland.