A number of people have been put on evacuation alert in the community, 115 kilometres north of Winnipeg, on the west side of Lake Winnipeg.
The ice jam is butting up against bridges, backing up water and causing a sudden escalation of the river.
In addition, the area is inundated with overland flooding. The two sources of water are now backing up into the land-drainage system, said emergency co-ordinator Stefan Ostertag.
"There is so much groundwater — overland water — coming from the west. The Icelandic River's got a pretty big watershed and we're right in the middle of it, right at the bottom end of it, I should say," he said.
"We've got heavy equipment trying to push ice past our government dock and the Amphibex [icebreaking machine] is standing by," he added.
"I think they're waiting for the water rescue crew. They can't be deployed until they have that on site."
The school, day care and health clinic in the village have been shut down due to the emergency.
"And we've got pumps all over town," said Ostertag.
About 600 people live in the village.