Captain Eabha O'Mahony and Blessing Kingsley scored the goals for Colin Bell's side in Reykjavik as Ireland suffered their second defeat in the training week to Iceland, ahead of their Elite Round stage against Germany, Norway and Scotland.
Hafrun Rakel Halldorsdottir opened the scoring for the hosts before Cork City star O'Mahony equalised just two minutes later. From a left-sided corner, O'Mahony unleashed a bullet of a strike from just inside the box in the 20th minute.
However, Ireland conceded two goals in five minutes before the half-hour as strikes from Arna Eiriksdottir and Ida Marin Hermannsdottir saw the home side lead 3-1 at the break.
Substitute Kingsley almost sparked a comeback in the second-half as Emily Whelan found the Wexford Youths forward in space to score in the 61st minute. Unfortunately, despite a fine effort, Ireland conceded two late goals and Head Coach Colin Bell believes the team need to learn from their mistakes.
"We were well in the game today and we had some excellent phases of play. Thereis no way they should have been able to score five goals against us though," said WU17 Head Coach Colin Bell.
"We scored a fantastic equaliser and it seemed as though we were right in the game at that stage. But, we let in two poor goals before half-time and it makes it really difficult for ourselves.
"The goals were preventable and we didn't deserve to go in at the break two goals down. Despite that, we came back into it and there were good aspects to our play. They were clinical towards the end of the game and you've got to look at it, and say they're further ahead in their development than we are.
"We need to work really hard from now until the Elite Round in March to get up to the standard required. We've taken the team out of comfort zone to play against a better team and hopefully this experience will benefit us in the long term."
WNT Head Coach Colin Bell will now travel from Reykjavik, Iceland straight to Nyon, Switzerland for the UEFA 2021 European Championships draw where the WNT will find out their qualifying opponents. The draw will take place at 12.30pm (1.30pm CET) tomorrow and will be streamed live on the UEFA website.
Republic of Ireland: Maeve Williams (GK), Therese Kinnevey, Shauna Brennan, Ellie Ferguson (Kayla Brady 65), Mia Dodd, Aoibheann Clancy (Sophie Liston 71), Emily Whelan, Jessica Ziu, Emily Kraft (Blessing Kingsley 50), Eabha O'Mahony, Della Doherty.
Iceland: Anita Olafsdottir (GK), Hafrun Rakel Halldorsdottir, Andrea Mary Sigurjonsdottir, Arna Eiriksdottir, Ida Marin Hermannsdottir, Birta Georgsdottir, Valgerour Osk Valsdottir, Porhildur Porhallsdottir, Andrea Rut Bjarnadottir, Hjordis Erla Bjornsdottir, Ragna Gudrun Gudmundsdottir.