European championship quarter-finalists Iceland, who made eight changes from the side that beat Kosovo on Friday to stay second in World Cup qualifying Group I, took the lead on 21 minutes when left back Magnusson curled a free kick over the Ireland wall and into Keiren Westwood's left-hand corner.
Ireland handed debuts to Brentford defender John Egan and Aston Villa midfielder Conor Hourihane in a starting lineup that was also much changed from last week's goalless draw with Wales that put Martin O'Neill's side level on points at the top of Group D.
The hosts controlled a second half where the Preston North End pair of Andy Boyle and the impressive Daryl Horgan got their first taste of international action, but were unable to breach an Icelandic defence well-marshalled by Sverrir Ingi Ingason.
Ireland take on Austria in their next qualifier in June, seeking to cement their top-two standing while Iceland host Group I leaders Croatia, the only team to have beaten them in their opening five games.
(Reporting by Padraic Halpin; Editing by Toby Davis)
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