Northern lights are seen during the cold, dark winter nights in Iceland where you have to be prepared to stay outside watching the sky for a long time, possibly for hours. So how to dress for that? This is how I dress:
1 Woollen underwear.
2 Hiking pants, fleece jacket, possibly a woollen Icelandic lopapeysa (traditional woollen outdoor sweater) if you are sensible to the cold.
3 Parka.
4 Woollen socks. Hiking boots or winter boots.
5 Hat and gloves.
6 Camera + tripod.
If you want to experience the northern lights with a private guide then check this out