How to make it?
You should know how to knit, have Icelandic yarn (i. 'Lopi') handy and find instructions online.
The sweater is characterized by a yoke design, that is, a wide decorative circle surrounding the neck opening. The sweater is knitted in a non-varying circle, meaning that there is no difference between the front and the back, unless a zipper is added. The yarn used, lopi, is made from the wool of Icelandic sheep and contains both wind hairs and fleece. Lopi is remarkable in that it is not spun, so it contains more air than spun yarn and as a consequence it has better insulation properties. This also makes lopi more difficult to handle than spun yarn, in particular for those new to the material. The colors can be artificial, but undyed wool of various colors is available and much in demand.
The easiest way to acquire an Icelandic wool sweater is to buy it here, handmade in Iceland, available at most souvenir shops and other places.