There are numerous references to Yule celebrations in the Icelandic Sagas, but they are very sparse in their description of how Yule was celebrated in those times. No real contemporary accounts exist, though a piece of verse considered to be from the Ninth Century refers to the "drinking of Yule".
There are numerous other references to this "drinking of Yule", for example in The Story of Hákon Háreksson, it is stated:
Almost the only thing that comes through clearly in the references to Yule in the Saga era is that feasts, and drinking of Yule Ale were common features. In Eyrbyggja saga the existence of a large amount of ale just before Yule is a fact that seems to be too normal to require explanation. In the Saga of Greenland, Eiríkur rauði, Eric the Red, was worried that he could not prepare for Yule as well as he knew he should. But Þorfinnur karlsefni, just back from America, saved the day. He had carried with him malt for ale making.
These Yule Feasts were of course different in size and splendour, from the chieftains inviting scores of people to Yule, to just the residents of one farm "drinking Yule" together. In the larger Yule feasts of the chieftains, guests received gifts upon departure, and this departure was after feasting several days.
The chieftains also wanted to decorate their houses for Yule, as can be seen when farmer Ingjaldur, who did not like foreigners at all, accepted decorative material from a Norwegian to use at his Yule feast. The proud farmer, who detested foreign merchants, could not resist having the best decorative materials available for his Yule feast, even if the source was a foreign merchant.
There are no indications that any religious practices were connected to Yule in the Saga era, but that proves nothing as the contemporary references are lacking.