"A volcanic eruption started this evening at 20:45 near Fagradalsfjall in Geldingadalur", IMO said in a tweet.
Keflavik Airport, Iceland's global air traffic hub, said flights have remained on schedule since the eruption began.
Icelanders had been bracing themselves for an eruption for several weeks, after the island nation recorded more than 50,000 recent earthquakes.
A volcano erupted near Iceland's capital Reykjavik on Friday, shooting lava high into the night sky after thousands of small earthquakes in recent weeks.
The last one was at Holuhraun in 2014, when a fissure eruption spread lava the size of Manhattan over the interior highland region.
"We ask people to stay calm and not under any circumstances go close to the eruption site or on Reykjanesbraut".
Taken from the Coast Guard helicopter.
Iceland's Minister of Justice Aslaug Arna Sigurbjornsdottir shared an image of the eruption showing a night sky glowing bright red.
The Reykjanes Peninsula hadn't seen an eruption of any volcano in 781 years, though there had been signs of a possible eruption recently, with earthquakes occurring daily for the past three weeks.
But the region has been under increased surveillance for several weeks after a 5.7-magnitude natural disaster was registered on February 24 near Mount Keilir on the outskirts of Reykjavik.
Experts had expected the eruption of lava was unlikely to resemble the 2010 Eyjafjallajökull volcano, which generated a massive ash cloud, disrupting around 900,000 flights across Europe.
Located between the Eurasian and the North American tectonic plates, among the largest on the planet, Iceland is a seismic and volcanic hotspot as the two plates move in opposite directions.