Iceland participated in the Eurovision Song Contest 2007 with the song "Valentine Lost" written by Sveinn Rúnar Sigurðsson and Peter Fenner. The song was performed by Eiríkur Hauksson. Eiríkur Hauksson previously represented Iceland in the Eurovision Song Contest 1986 as part of the group ICY and Norway in the Eurovision Song Contest 1991 as part of the group Just 4 Fun, placing sixteenth and seventeenth with the songs "Gleðibankinn" and "Mrs. Thompson", respectively. The Icelandic entry for the 2007 contest in Helsinki, Finland was selected through the national final Söngvakeppni Sjónvarpsins 2007, organised by the Icelandic broadcaster Ríkisútvarpið (RÚV). The selection consisted of three semi-finals and a final, held on 20 January, 27 January, 3 February and 17 February 2007, respectively. Eight songs competed in each semi-final with the top three as selected by a public televote advancing to the final. In the final, "Ég les í lófa þínum" performed by Eiríkur Hauksson emerged as the winner exclusively through public televoting. The song was later translated from Icelandic to English for the Eurovision Song Contest and was titled "Valentine Lost".

The Eurovision Song Contest 2007 was the 52nd edition of the Eurovision Song Contest. It took place in Helsinki, Finland, following the country's victory at the 2006 contest with the song "Hard Rock Hallelujah" by Lordi. Organised by the European Broadcasting Union (EBU) and host broadcaster Yleisradio (YLE), the contest was held at the Hartwall Areena, and consisted of a semi-final on 10 May, and a final on 12 May 2007. The two live shows were presented by Finnish television presenter Jaana Pelkonen and musician and TV-host Mikko Leppilampi. In addition, Krisse Salminen acted as guest host in the green room, and reported from the crowds at the Senate Square.