Between 2002 and 2007, large-scale excavations at the episcopal manor and school of Skálholt in the southwest of Iceland unearthed a massive assemblage of material culture dating from the mid-17^th to late 18^th century. One of the key questions this paper will address is the position this settlement had within the wider religious, cultural, and economic changes that were taking place over this time period, both within Iceland and the North Atlantic. Special emphasis will be placed on understanding how ideology and the economic nexus were intertwined, and the contradictions that may have emerged over time between these different elements. Skálholt led the Reformation in Iceland, but it was also in the vanguard of the consumer revolution, being one of the most populous settlements in the country before the foundation of Reykjavik as a town in the late 18^th century. This paper explores what an archaeology of modernity might look like for Iceland, and in particular, focuses on the relation between spatial organization and ideologies of community which were undergoing major change at this time.