We find that the earthquake dynamic rupture scenarios on a less segmented fault system, particularly with a hypocenter location in the eastern part of the fault system, have a larger potential for local tsunami generation. The six dynamic rupture models sourcing our tsunami scenarios vary regarding hypocenter location, spatio-temporal evolution, fault slip, and fault structure complexity but coincide with historical earthquake magnitudes. Our analysis shows that the HFFZ has the potential to generate sizeable tsunamis. Here, we investigate physics-based scenarios combining 3D earthquake dynamic rupture with tsunami generation and propagation for the ∼100 km long Húsavík-Flatey Fault Zone in North Iceland using time-dependent one-way linked and 3D fully-coupled earthquake-tsunami modeling. Earthquakes associated with unexpected tsunamis, such as the 2018 M w 7.5 strike-slip Sulawesi earthquake, emphasize the need to study the tsunami potential of active submarine faults in different tectonic settings. Tsunamigenic earthquakes pose considerable risks, both economically and socially, yet earthquake and tsunami hazard assessments are typically conducted separately.