Barnið heldur í höndina mína.

The basic noun is barn, which means child.

The ending -ið is the suffixed definite article, so:

• barn = child
• barnið = the child

Icelandic usually adds the to the end of the noun instead of using a separate word like English does.

Because Icelandic grammatical gender is not always the same as real-life sex or gender.

Barn is simply a neuter noun in the grammar of the language. That does not mean the child is biologically neuter. It just means that words connected to barn follow neuter grammar patterns.

So in this sentence, barnið is grammatically neuter because the noun barn is neuter.

Heldur is the 3rd person singular present tense of halda.

So:

• að halda = to hold, to keep, and in some expressions other related meanings
• barnið heldur = the child holds / is holding

It is 3rd person singular because the subject, barnið, is singular: the child.

Because halda í is a very common Icelandic expression meaning hold on to or be holding something.

So the sentence is not built like English hold my hand. Icelandic uses:

• halda í höndina mína
  literally something like hold in/onto my hand

You should learn halda í as a unit here. Many Icelandic verbs naturally combine with a preposition in ways that do not match English exactly.

This is a case question.

A learner might expect í to take the dative in a location meaning, but with verb-preposition combinations like halda í, it is best to learn the whole pattern together. Here, halda í takes the accusative.

So:

• höndina mína = accusative singular
• hendinni minni = dative singular

In this sentence, the correct form is í höndina mína because that is the case pattern used with halda í.

The dictionary form is hönd, meaning hand.

It is a feminine noun, and it is somewhat irregular, so its forms do not all look very similar.

In this sentence:

• hönd = hand
• höndina = the hand in the accusative singular

So höndina is not a different word; it is just the correct grammatical form of hönd for this sentence.

Mína is the form of minn meaning my that matches höndina.

It has to agree with the noun in:

• gender: feminine
• number: singular
• case: accusative

That is why you get mína here.

Also, Icelandic very often puts the possessive after the noun when the noun has the suffixed definite article:

• höndin mín = my hand
• höndina mína = my hand in the accusative

This may feel like the hand my to an English speaker, but it is completely normal Icelandic.

Because in Icelandic, a phrase like the hand my is the normal way to say my hand.

So:

• höndina mína literally looks like the hand my
• but naturally it just means my hand

This is very common with possessives in Icelandic:

• bíllinn minn = my car
• húsið mitt = my house
• bókin mín = my book

So it is not considered redundant in Icelandic.

It can cover both, depending on context.

Icelandic present tense often corresponds to either:

• English simple present: holds
• English present progressive: is holding

In a sentence like this, English would often translate it as The child is holding my hand, because that sounds most natural for an action happening right now.

So the Icelandic form heldur does not itself force one choice; the context does.

The sentence has a very standard Icelandic main-clause order:

• Barnið = subject
• heldur = verb
• í höndina mína = prepositional phrase

So the pattern is basically:

Subject + Verb + Prepositional phrase

That makes Barnið heldur í höndina mína a neutral, natural sentence with no special emphasis.