Catarina Macario scored exquisite goals in the 37th and 45th minutes and later assisted on the second of two goals by Mallory Pugh, who scored in the 60th and 75th minutes. Kristie Mewis made it 5-0 in the 88th minute.
Iceland entered with two victories for six points and needed only a tie to claim the title over the United States, which had a win and a tie for four points.
Conditions were more suited to the visitors with a kickoff temperature of 23 degrees Fahrenheit and a winter storm warning for the area.
The match was played a day after the landmark agreement between the USWNT and the U.S. Soccer Federation for pay equal to that of the men's team. Under the settlement, the women are guaranteed a total of $24 million plus bonuses by the federation to match the men, as long as a new collective bargaining agreement is reached.
With that as the backdrop, the U.S. dominated but couldn't find the breakthrough until some Macario magic made it 1-0. She lasered a shot from the upper left corner of the penalty area. The ball smacked the right post and went across the goal line.
Eight minutes later, Pugh's pass rolled through the box to Macario on the right side. Macario was 15 yards from goal and at a low angle when she sent a chip over flat-footed goalkeeper Sandra Sigurdardottir for her fifth international goal in 15 games.
Macario had a chance for a hat trick but on a two-on-one passed to an open Pugh for the 4-0 lead. Pugh has 21 goals in 70 games.
Casey Murphy made one save for the USWNT's 17th straight home shutout.