Meat with high levels of dioxin had been put on the market, including outside of Iceland, the country's Food and Veterinary Authority said, adding that it had launched an investigation into the matter.
"Measurements show that a small part of 6.5 tonnes of meat that was put on the market had high levels of dioxin," the authority said in a statement.
"Of those 6.5 tonnes, 5.0 five tonnes of meat were exported," it added without specifying the kind of meat.
The authority stressed "it is considered very unlikely that the meat and milk that potentially had high levels of dioxin and were sold to the public will have serious health effects on people."
In a separate statement, the authority announced a recall of three different kinds if frozen beef due to possible dioxin contamination.
A livestock plant has also said it was recalling frozen lamb due to possible dioxin contamination.
Initial studies led by Iceland's chief epidemiologist found "no perceptible toxic effects" from the dioxin, the authority said, adding he would conduct tests "on people to figure out whether it has been consumed and in what quantities."
Dioxin, a by-product of burning rubbish and industrial activities, can cause a range of illnesses in humans including cancer. It can also cause miscarriages.
A damaging dioxin poisoning scare broke out in Germany in December after dioxin-contaminated feed was delivered to farms producing eggs and rearing poultry and pigs.
It prompted the destruction of farm products, widespread bans on producing and a temporary halt in imports.