This study utilizes a recently developed framework for the well-being economy to evaluate the impacts of COVID-19 in the sparsely populated Westfjords region of northwestern Iceland. A total of 42 semi-structured interviews were conducted with a broad spectrum of local community members, nearly all undertaken in October 2021. Local impacts to human and social capital were very evident, whilst economic consequences to individuals and business were largely mitigated through national economic packages. The remoteness of the Westfjords and pre-existing challenges, such as exposure to nature disasters, a harsh climate, and limited infrastructure, provided a bedrock of resilience with which to tackle the pandemic. This underpinned the sustainability of the communities, and flexible approaches to work and education constrained some of the worst potential effects of social distancing and isolation. Nevertheless, some socio-demographic groups remained harder hit than others, including the elderly in nursing homes and non-Icelandic speaking foreigners, who were marginalized via isolation and lack of information provision in the early, most severe outbreaks of COVID-19. The study demonstrated the coping mechanisms and solutions that were adopted to sustain subjective and community well-being, whilst reinforcing the importance of utilizing local community strengths in tackling the many challenges induced by a pandemic crisis.