Sigurdur Ingi Johannsson, who had been the country's agriculture minister, was sworn in as Prime Minister Thursday afternoon.
That came two days after former Prime Minister Sigmundur David Gunnlaugsson announced he was stepping down amid mounting protests and calls for his resignation after leaked documents from a Panamanian law firm
revealed his links to an offshore company.
Gunnlaugsson's resignation doesn't mean the dust has settled. He will remain head of the Progressive Party, which might not go down well with the throngs of Icelanders who have taken to the streets in protest and want nothing to do with him.
New elections are slated to take place at the end of 2016, according to public broadcaster RUV.
Since the Panama Papers
were leaked, senior Icelandic political figures have scrambled to hold emergency talks.
Gunnlaugsson's critics said the revelations involving the offshore company, which allegedly had holdings in Iceland's collapsed banks, shattered public confidence in his leadership and could harm the country's international reputation.
Gunnlaugsson had led the island nation of 330,000 people since 2013. The accusations involving him are especially painful for many Icelanders who remember the 2008 financial crisis, which resulted in the collapse of Iceland's currency, stock market and several major banks
Elected leaders implicated
Gunnlaugsson was one of numerous world leaders under scrutiny after a group of news organizations jointly published reports Sunday.
Those reports stemmed from millions of documents from Mossack Fonseca
, a Panamanian law firm that allegedly helped elected leaders and top officials set up secret shell companies and offshore accounts.
The reports accuse Gunnlaugsson of having ties to an offshore company, Wintris Inc., that were not properly disclosed.
CNN hasn't been able to verify independently the leaked documents, which German newspaper Sueddeutsche Zeitung obtained from an anonymous source and then shared with the International Consortium of Investigative Journalists.
Gunnlaugsson has not responded to a request for comment from CNN.
But he told Iceland's TV2 on Monday that he felt "betrayed and disappointed" by the accusations. He also offered an explanation to the broadcaster about why he'd abruptly left an interview with a Swedish network that questioned him over the allegations.
"I was surprised because I didn't really know what they were talking about. They started talking about tax havens and such. Then they made the impression that I had been involved in that," he said. "It is very important to remember that my wife's company has never been a tax haven. And it isn't really an offshore company since it has always been taxed in Iceland."
Mossack Fonseca said in a statement to CNN on Monday that while the firm "may have been the victim of a data breach, nothing we've seen in this illegally obtained cache of documents suggests we've done anything illegal, and that's very much in keeping with the global reputation we've built over the past 40 years of doing business the right way."
Questions over declaration of interest
Gunnlaugsson and his wife, Anna Sigurlaug Palsdottir, purchased Wintris from Mossack Fonseca in 2007, according to the journalism group
, which conducted a yearlong investigation in cooperation with more than 100 news organizations.
The journalism organization alleged the shell company was used to invest millions of dollars in inherited money, and that Gunnlaugsson did not disclose, as required by parliamentary rules, that he co-owned Wintris when he entered Parliament in April 2009.
But in a statement attributed to Gunnlaugsson and Palsdottir
published on his website March 27, he denied having breached the rules, saying that only companies with "commercial activity" had to be reported, while Wintris was simply a holding company for his wife's assets.
He had "therefore followed the rules for declarations of interests ever since he took a seat in parliament in 2009, regardless of how you look at this case," the statement read.
On the last day of 2009, Gunnlaugsson sold his half of the company -- headquartered on Tortola in the British Virgin Islands -- to Palsdottir for $1, the International Consortium of Investigative Journalists reported, citing the leaked documents.
In a statement later provided to the journalism group
, his office said that, as a holding company for his wife's assets, Wintris brought no tax advantages and had been created to avoid conflicts of interest in Iceland.
"It's been clear since before I began participating in politics that my wife had a considerable amount of money," he wrote in a post on his website Monday.
"Some people find that in itself very negative. I can't do much about that because I'm neither going to divorce my wife nor demand that she relinquish her family inheritance."
The journalism group reported that among Wintris' more notable holdings were bonds of three major Icelandic banks that collapsed in 2008. It said it was not clear how Gunnlaugsson's political activities could have affected the bonds' value.
Gunnlaugsson said in his statement on his website that his wife had never benefited from his political activities -- "quite the contrary."
"My political participation and the policies I have fought for have resulted in her wealth being decreased," he wrote.