Lena Lotzen gave Germany the lead in the 24th minute, turning her marker inside out before curling home a low left-footed shot.
With Germany dominating the game, Okoyino da Mbabi doubled the advantage 10 minutes into the second half, thumping home a rebound off the underside of the crossbar after a shot by Leonie Maier.
Six minutes from time, Okoyino da Mbabi claimed her second with a classic poacher's strike, cutting in front of her marker to slide the ball home.
The Germans racked up 31 shots and should have had several more goals but Iceland goalkeeper Gudbjorg Gunnarsdottir pulled off a string of brilliant saves to keep her side in the game.
Germany and Norway, who meet in their final group game on Wednesday, have four points with Germany ahead on goal difference.
Iceland and Netherlands have a point apiece before they meet in their last group game on the same day.
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