The UV photochemistry of small heteroaromatic molecules serves as a testbed for understanding fundamental photo-induced chemical transformations in moderately complex compounds, including isomerization, ring-opening, and molecular dissociation. Here, a combined experimental-theoretical study of 268nm UV light-induced dynamics in 2-iodothiophene (C4H3IS) is performed. The dynamics are experimentally monitored with a femtosecond extreme ultraviolet (XUV) probe that measures iodine N-edge 4d core-to-valence transitions. Experiments are complemented by density functional theory calculations of both the pump-pulse induced valence excitations and the XUV probe-induced core-to-valence transitions. Possible intramolecular relaxation dynamics are investigated by abinitio molecular dynamics simulations. Gradual absorption changes up to ∼0.5 to 1ps after excitation are observed for both the parent molecular species and emerging iodine fragments, with the latter appearing with a characteristic rise time of 160 ± 30fs. Comparison of spectral intensities and energies with the calculations identifies an iodine dissociation pathway initiated by a predominant π → π* excitation. In contrast, initial excitation to a nearby n⟂ → σ* state appears unlikely based on a significantly smaller oscillator strength and the absence of any corresponding XUV absorption signatures. Excitation to the π → π* state is followed by contraction of the C-I bond, enabling a nonadiabatic transition to a dissociative π→σC-I* state. For the subsequent fragmentation, a relatively narrow bond-length region along the C-I stretch coordinate between 230 and 280pm is identified, where the transition between the parent molecule and the thienyl radical + iodine atom products becomes prominent in the XUV spectrum due to rapid localization of two singly occupied molecular orbitals on the two fragments.