The Viking Village Restaurant is right next to the Viking Hotel in Hafnarfjordur, Reykjavik area, about 11km from the center. We had our last dinner here and really loved it. Some people consider it a tourist trap. That may be, since the prices are not cheap—but the food is unbelievable.
We had the Viking menu, which starts with the famous Hákarl - a piece of rotten shark. We were told that the taste varies and that dark meat is usually stronger than the white meat. Anthony Bourdain has described hákarl as "the single worst, most disgusting and terrible tasting thing" he has ever eaten, but I am here to disagree.
We had white meat and if you like strong cheese you will be OK with this too. It comes with a shot of "Black Death" schnapps. Main course was a huge leg of lamb cooked to perfection, the meat was simply falling off the bone and melting in your mouth.
There are actors dressed as Vikings, playing different sagas, vocal and instrumental. They are allot of fun to watch as they interact with the people in the restaurant. There was a large German group inside and they put on quite the show for them and us too since we were all in the same room.
I would prefer a bit more light inside the restaurant as it is pretty dark - they are trying to recreate the conditions of a Viking longhouse - but apart from that it was a great and delicious experience.