Swedish-Icelandic documentary film commissioned by Iceland's tourist board, which in magnificent color photography links the heritage from the fairy tale era with contemporary Iceland. The film was produced in two language versions – one in Swedish and one in Icelandic – different soundtracks and subtitles, but where the moving images were the same.

"Síðasti bærinn í dalnum" is in the spirit of old folktales, a classic fairy tale about the struggle of good and evil. In the countryside, all the farmers have fled because of pestering trolls. One farmer, however, holds his ground with his family as the grandmother keeps a magic ring that protects the inhabitants from all evil. The trolls try to steal the ring and thus set in motion a series of events where forces of evil, a dwarf who can make himself invisible and an elf queen come to light.

A film showing icelandic farmlife with elements of icelandic folklore mixed in.