The former primary school site at Carn Thomas may be redeveloped with visitors in mind, according to the Duchy of Cornwall.
The site on St Mary's is one of several earmarked as possible locations for new affordable housing in the Draft Local Plan.
Deputy Land Steward Luke Humphries gave an update on the Duchy's recent activities at Scilly Business Week on Monday.
He said that the Duchy "remain committed to finding a solution to the housing problem on Scilly and are working closely now with the Council, who are exploring a direct delivery model with some Duchy land in the mix as possible housing sites".
He then discussed the future of the former primary school site, saying it has "certainly formed part of our strategic thinking".
However, he said that the Islands' Partnership’s visitor-focused Destination Management Plan (DMP) has raised the possibility of heading in a different direction.
"The Council has all but vacated the site now and we are carrying out detailed thoughts as to its possible re-use. Housing is perhaps the most obvious next use for the site and certainly one which over the years has been in our thoughts. However, having the DMP to shine a light on the wider priorities, there is perhaps an opportunity to provide a different, more visitor-focused use for the building and the wider site there."
Luke added that IP Executive Director David Jackson and the Creative Islands team have been working on delivering the Cultural Destinations project and "are now exploring ways this can be achieved".
Carn Thomas was one of seven locations allocated for housing development in the Draft Local Plan, with around seven homes envisaged at the site. The Pre-Submission version of the Draft Local Plan is currently open for public consultation.
The Council of the Isles of Scilly recently unveiled plans to build at least 30 affordable homes in the next five years as the first phase of its ambition to deliver up to 105 by 2030.
It highlighted three sites as suitable for initial development - the former Carn Thomas secondary school, Land North of Ennor Farm and Land East of Ennor Close.