The aim of this paper is to study the emergence of a working class in Akureyri in the period 1860‒1940, when capitalist society was evolving in Icelandic society. The research is based on censuses and historical data and uses a research model based on the Marxist theory of social class. The main findings indicate that about 1860 foreign merchants were prominent in the population of Akureyri and the town had the character of a self-substinence community. From the latter part of the 19th century the community began to show increasing signs of a class-divided capitalist system. A radical change in the composition of the working class occurred during this period with a steady increase of labourers in industry and fishing. At the same time the number of independent artisans and domestic service personnel declined. The proletarization of the genders occurred later and happened at a slower rate among women. At the foundation of the Icelandic republic in 1944, Akureyri had all the characteristics of a prominent class division, where the different classes, and especially the genders, were seen as socially distinct.