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One of the retailer's most popular items, it was launched into the stratosphere's temperatures of minus 60C (minus 76F) from a location close to the company's head office in Deeside, North Wales.
Having reached peak altitude, it then headed back towards Earth at 200mph (322kph), with its parachute deploying at around 62,000ft (19,000m) to enable a safe landing.
The altitude reached was reported to be equivalent to the height of 880,000 Iceland chicken nuggets.
A staple of the frozen food aisles, more than 10 million chicken nuggets, chunks and strips were sold last week alone.
It has been a successful year for Iceland, which has been named the fastest-growing high street supermarket with 20.1% year-on-year growth.
Trading director Andrew Staniland said:
“2020 is a huge year for us as we celebrate our 50th birthday, and we wanted to find ways to mark the occasion, just like anyone celebrating a birthday in lockdown."
“What better way to show that our products are out of this world than by sending one of our customer favorites into space."
“We've all changed the way we shop in recent months and frozen food has never been so popular. We're looking forward to continuing to celebrate our 50th year with customers and thanking them for their support."
Iceland partnered with Sent Into Space, a team of experts in the field of stratospheric exploration, to send the nugget into the atmosphere.