The offshore wind climate in Iceland is examined based on satellite synthetic aperture radar (SAR), coastal meteorological station measurements, and results from two atmospheric model data sets, HARMONIE and NORA10. The offshore winds in Iceland are highly influenced by the rugged coastline. Lee effects, gap flow, coastal barrier jets, and atmospheric gravity waves are not only observed in SAR, but are also modeled well from HARMONIE. Offshore meteorological observations are not available, but wind speed and wind direction measurements from coastal meteorological masts are found to compare well to nearby offshore locations observed by SAR. More than 2500 SAR scenes from the Envisat ASAR wide swath mode are used for wind energy resource estimation. The wind energy potential observed from satellite SAR shows high values above ${1000}\;{Wm}^{ - {2}}$ in coastal regions in the south, east, and west, with lower values in the north. The most promising region for wind energy production is the southwestern coastal region.