"The strong institutions, attitudes and structures of peace that Iceland maintains has bolstered the country's resilience against small internal shocks," they said.
New Zealand came second, with the researchers noting the Christchurch mosque attacks, but stating that our country had improved other scores and developed a "resilience" to cope with such disasters.
"New Zealand maintained or improved its scores in 22 out of 23 indicators, but deteriorated in the impact of terrorism because of the 15 March 2019 terror attack on two mosques in Christchurch, in which 51 people were killed," the report said.
"Improvements in five other indicators across all three domains helped New Zealand maintain its rank as the second most peaceful country in the world."
Portugal was ranked third, and Austria fourth despite the likelihood of violent demonstrations after a far-right party joined the government, the Global Peace Index report said.
Denmark was fifth, with European nations dominating the top of the list.
"Europe remains the most peaceful region in the world and it recorded a very slight improvement in peacefulness after several years of deterioration," the report said.
"However, despite these improvements, the broader political environment in Europe remains uncertain, and resurgent nationalism and terrorism remain significant threats to peace."
Japan scored highly among leading world powers, coming in as the world's 9th-most peaceful country.
Germany was 22nd, the United Kingdom 45th and France 60th - while the United States dropped four places to 128th.
The report highlighted that the growing political polarisation in America added tensions between Washington and Iran is why the country's ranking dropped to 128.
"Confidence in US leadership has fallen the most in the past five years, with people now having more confidence in China than the US on average," the report noted.
Australia's score also fell slightly, as researchers said the country had increased its military expenditure and weapons imports.
Russia scored badly, coming 10th from the bottom, below North Korea.
Afghanistan was listed at the bottom of the rankings, scoring even worse than Syria, where ISIS was swept out of its last patch of territory earlier this year.
"Despite the improvement this year, the world remains considerably less peaceful now than a decade ago," the report said.
"A wide range of factors drove the fall in peacefulness over the past decade including increased terrorist activity, the intensification of conflicts in the Middle East, rising regional tensions in Eastern Europe and northeast Asia, increasing numbers of refugees, and heightened political tensions in Europe and the US," the report explained.
South Sudan, Yemen and Iraq were also ranked as the least peaceful country in the world.
The full list of countries in the 2019 Global Peace Index
1. Iceland
2. New Zealand
3. Portugal
4. Austria
5. Denmark
6. Canada
7. Singapore
8. Slovenia
9. Japan
10. Czech Republic
11. Switzerland
12. Ireland
13. Australia
14. Finland
15. Bhutan
16. Malaysia
17. Netherlands
18. Belgium
18. Sweden
20. Norway
21. Hungary
22. Germany
23. Slovakia
24. Mauritius
25. Romania
26. Bulgaria
27. Chile
28. Croatia
29. Poland
30. Botswana
31. Qatar
32. Spain
33. Costa Rica
34. Uruguay
35. Latvia
36. Taiwan
37. Estonia
38. Lithuania
39. Italy
40. Malawi
41. Indonesia
42. Mongolia
43. Kuwait
44. Ghana
45. United Kingdom
45. Laos
47. Panama
48. Timor-Leste
48. Zambia
50. Serbia
51. Albania
52. Sierra Leone
53. United Arab Emirates
54. Tanzania
55. South Korea
55. Madagascar
57. Vietnam
58. Senegal
59. Liberia
60. France
60. Namibia
62. The Gambia
63. Cyprus
64. Kazakhstan
65. Greece
65. North Macedonia
67. Montenegro
68. Moldova
69. Oman
70. Equatorial Guinea
71. Ecuador
72. Benin
72. Sri Lanka
72. Eswatini
75. Argentina
76. Nepal
77. Angola
77. Jordan
79. Rwanda
80. Peru
81. Bosnia and Herzegovina
82. Tunisia
83. Jamaica
84. Dominican Republic
85. Bolivia
86. Kosovo
87. Haiti
88. Paraguay
89. Cambodia
90. Morocco
91. Cuba
92. Guyana
93. Trinidad and Tobago
94. Mozambique
95. Kyrgyz Republic
96. Gabon
97. Belarus
98. Papua New Guinea
99. Georgia
100. Guinea
101. Bangladesh
102. Uzbekistan
103. Lesotho
104. Burkina Faso
105. Tajikistan
105. Uganda
107. Cote d' Ivoire
108. Togo
109. Djibouti
110. China
111. Algeria
112. Guinea-Bissau
113. El Salvador
114. Guatemala
115. Turkmenistan
116. Brazil
117. Thailand
118. Armenia
119. Kenya
120. Nicaragua
121. Republic of the Congo
122. Mauritania
123. Honduras
124. Bahrain
125. Myanmar
126. Niger
127. South Africa
128. United States of America
129. Saudi Arabia
130. Azerbaijan
131. Ethiopia
132. Zimbabwe
133. Eritrea
134. Philippines
135. Burundi
136. Egypt
137. Chad
138. Cameroon
139. Iran
140. Mexico
141. India
142. Palestine
143. Colombia
144. Venezuela
145. Mali
146. Israel
147. Lebanon
148. Nigeria
149. North Korea
150. Ukraine
151. Sudan
152. Turkey
153. Pakistan
154. Russia
155. Democratic Republic of the Congo
156. Libya
157. Central African Republic
158. Somalia
159. Iraq
160. Yemen
161. South Sudan
162. Syria
163. Afghanistan
