Ólafur graduated from The Icelandic Drama School in 1998. After graduating, he became involved in numerous productions with the National Theatre of Iceland and City Theatre of Reykjavik, also working with various independent theatre groups. He is one of the founders of Vesturport Theatre in Reykjavik.
Ólafur is in a relationship with Icelandic Dancer Lovísa Ósk Gunnarsdóttir. They have two daughters born in 2010 and 2014.
In June 2016, Ólafur lip synced in the music video for Winter Sound by the Icelandic band Of Monsters and Men.