Often considered one of the country's most beautiful birch woods, Ranaskógur has numerous birches with white bark and tall, straight trunks. Moreover, the forest floor is unusually smooth, in comparison to most Icelandic wooded areas. In the Icelandic name, skógur means "woods" and rana refers to the lower end of the long ridge west of the Gilsá river gorge. Ranaskógur extends along the west side of the gorge, which is the traditional border between two counties in East Iceland. The Icelandic birch species is Betula pubescens. Besides the abundant wood crane's-bill, Geranium sylvaticum, and stone bramble berry plants, Rubus saxatilis, in the undergrowth, Ranaskógur has an unusual number of tall rowan trees, Sorbus aucuparia; in fact, no other Icelandic site presents such a concentration of large rowans. At the Kiðuhóll rise in the middle of Ranaskógur, Metúsalem J. Kjerúlf, farmer at the nearby Hrafnkelsstaðir, started a plot of coniferous trees between 1955 and 1961, in remembrance of his brother Páll. Not only did Metúsalem plant 23 different species, but 21 are still represented, with the tallest trees nearing a height of 20 m.

The Ranaskógur woods have existed ever since Iceland's settlement and are mentioned in documents from the 15th century. They are part of the woods which figured in the well-known Saga of Hrafnkell, which states that the saga's hero cut down stands of trees here when he moved to this valley and built up the farm that has since been named after him, Hrafnkelsstaðir. Nineteenth-century quarrels between the Hrafnkelsstaðir and Víðivellir farmers over the use of forest resources resulted in most of the lower part of the woods being cut down. While the woods had previously extended south below Kirkjuhamar cliff, now only a very few of those trees remain, at a place called Skógarbali. The traditional use of Ranaskógur for firewood continued until nearly the middle of the 20th century, and in 1951 Eiríkur M. Kjerúlf bought the woods to make them part of a new farm, Vallholt.