Iceland has lowered its aviation alert over the nation's largest volcano to orange from red, following an eruption at the Bardarbunga peak overnight.
A ban on air traffic around the country's largest volcanic system was lifted.
Authorities said there were no signs of spewing ash.
A major explosion at Bardarbunga, located under Europe's largest glacier, could signal a replay of the global travel chaos triggered when another Icelandic peak blew four years ago, creating a massive ash cloud across Europe.
Iceland's civil protection office said the latest eruption began just after midnight local time and had created a volcanic fissure of up to a kilometre long.
The alert around Bardarbunga was initially raised to red from orange on 23 August, which led to the closure of airspace in the affected area, although all airports in Iceland remained opened.
The aviation ban was lifted the following day although seismic activity in the area remained high, with earthquakes shaking the volcanic system more than 20 times an hour on Tuesday alone.
One of the quakes measured 5.7, the most powerful in the area since 1996.
Several hundred homes were evacuated earlier this week from the area, which is uninhabited, with only trekking cabins and campsites used by tourists and hunters in the summer months.
Bardarbunga, in the southeast of the country, is Iceland's second-highest peak, rising to more than 2,000 metres.
The eruption of Eyjafjallajökull, a smaller volcano, in April 2010 caused travel mayhem, stranding more than eight million people in the widest airspace shutdown since World War II.
Iceland's most active sub-glacial volcano Grimsvotn erupted in 2011, forcing the country to temporarily shut its airspace and sparking fears of a repeat of the Eyjafjoell flight chaos
Iceland is home to more than 100 volcanic mountains, including some of the most active in the world.