Population-based studies on the epidemiology of autoimmune hepatitis (AIH) are scarce. Drug-induced AIH (DIAIH) is increasingly recognized in association with immunomodulatory therapy. We aimed to determine the incidence, prevalence and natural history of AIH in a population-based setting. We collected data of new diagnosis of AIH in Iceland from 2006 to 2015. Cases were identified through search of diagnostic codes and text search for AIH within electronical medical records of all hospitals in Iceland and through records of smooth muscle antibodies (SMA) test results by the only laboratory in the country analyzing SMA. Patients were included in the final analysis if they received the clinical diagnosis of AIH or were started on immunosuppressive therapy. The mean annual incidence of AIH in Iceland was 2.2 cases per 100 000 inhabitants. Point prevalence on 31 December 2015 was 27/100 000. The median age at diagnosis was 56 years and 86% of patients were of female gender. DIAIH was suspected in 13 of 71 patients (18%) of which eight cases were related to infliximab. Immunosuppressive treatment was started in all but two patients. At the end of follow-up (median 4.8 years) 66 of 71 (93%) patients were alive. The incidence and prevalence rates of AIH in Iceland are the highest reported so far in a population-based setting. Higher incidence can partly be explained by the increasing use of biological drugs. Immunosuppressive therapy was very effective in achieving remission and prognosis was favorable. © 2019 John Wiley & Sons A/S. Published by John Wiley & Sons Ltd.