Reykjavík, capital of Iceland, developed from a dispersed rural settlement to nucleated urban community during the last 250 years. Prior to the mid-18^th century, Iceland was a rural society that lacked towns or even substantial villages, with seasonal market centers and elite manor farms managing economic activities for widely dispersed farms and seasonal fishing stations. This paper focuses on two downtown Reykjavík faunal collections as part of the urban development from the mid-17^th century. The collections from Aðalstræti 10 and Tjarnargata 3c reflect some of the changes associated with increasing population density and specialized production in a more densely populated area. Some of the finds data and history of the town are incorporated into this text as well as a brief comparison of all the post-medieval downtown Reykjavik collections with the archaeofauna from the 18^th-century layers from the former southern bishop's estate at Skálholt and also with that of the fishing farm Finnbogastaðir in the Westfjords. The substantial archaeofauna from Tjarnargata 3c and Aðalstræti 10 help identify the nature of these two sites and their role in the emerging town.