Which country has the world's northernmost capital city?

The country whose capital is the world's northernmost capital of a sovereign state is Iceland, whose capital is Reykjavík.

Reykjavík lies at approximately 64°08′ north latitude on Iceland's southwestern coast. Its far-northern position gives it long summer daylight and very short winter days, although the surrounding ocean moderates temperatures compared with many places at similar latitudes.

The wording “of a sovereign state” matters. Nuuk, the capital of Greenland, lies slightly farther north, but Greenland is an autonomous constituent country within the Kingdom of Denmark rather than an independent sovereign state. By the usual national-capital comparison, Reykjavík therefore holds the record.

Reykjavík became an official town in 1786 and is now Iceland's largest city as well as its political, cultural, and economic center. Its name is commonly translated as “Smoky Bay,” referring to steam rising from nearby geothermal areas.