Abstract: This paper describes the construction of Minor Statistical Output Areas (MSOAs) in Iceland in preparation for the 2021 Population and Housing Census. It explains how these areas were generated by a partitioning algorithm in the densely populated areas, using pre-existing planning zones as the building blocks or source zones. Approximately a fifth of the MSOAs were constructed manually in the sparsely populated areas by grouping together smaller municipalities and splitting larger localities from the surrounding rural areas.