From Wikipedia:

One Icelandic tunnel has been dug under a fjord, the Hvalfjörður Tunnel (Hvalfjarðargöng), and is among the longest underwater road tunnels in the world.

From http://www.hnit.is/english/index.php?id=20:

Preparations for a new 5,8 km long tunnel in 3 million year old basalt layers under Hvalfjordur (3,1 km sub-sea tunnel) were started in 1991. The operating party (Spolur) made a contract with Fossvirki, a swedish-danish-icelandic concern, to design the tunnel. The design process started in May 1996 and the tunnel was formally opened in July 1998. Spolur´s total cost of the project was around 70 million US$.
View in Google Earth Categories: Tunnels
Links: www.hnit.is
By: AlbinoFlea
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