Grænagil, which means "green canyon" in Icelandic, is a short walk from the Landmannalaugar campground. The upper end of this hike is a challenging scramble through the Laugahraun lava field. The lower canyon is worth it — a lovely colourful treat. The green rock is probably olivine.

Landmannalaugar is a natural wonder situated in the colorful rhyolite mountains of Fjallabak Nature Reserve. The region is known for its soothing hot springs, brightly colored peaks, steam plumes, and clear blue lakes. The hot pools at Landmannalaugar are one of many manifestations of geothermal activity in the area, which also tends to alter the minerals in the rocks, causing the beautiful colour variations from red and yellow to blue and green, a good example being Brennisteinsalda. 

The Fjallabak Nature Reserve was established in 1979, covering 47,000 hectares. The land is mountainous, sculptured by volcanoes and geothermal activity, covered by lavas, sands, rivers and lakes. It takes its name from the numerous wild and rugged mountains with deeply incised valleys, which are found there. The topography of the Torfajokull, central volcano found within the reserve, is a result of the region being the largest rhyolite area in Iceland and the largest geothermal area (after Grimsvotn in Vatnajokull).

Volcanic activity in the last 10,000 years has been restricted to a few fissures. The most recent one, the Veidivotn fissure from 1480, formed Laugahraun, Namshraun, Nordurnamshraun, Ljotipollur and other craters which extend 30 km further to the north. Eruptions in the area tend to be explosive and occur every 500-800 years, previous known eruptions being around AD 150 and 900.