The tree-covered island contains the remains of a centuries-old monastery and is believed to have been a university where Brian Boru studied.
The largest island in picturesque Lough Lein, Innisfallen lies about a mile off Ross Castle, and is easily reached by boat.
But, according to Killarney Independent Cllr Donal Grady, the island is largely bypassed. He called for a campaign to “make Innisfallen more than an island off Ross Island”.
Along with Independent Cllr Michael Courtney, he proposed, at a Killarney Town Council meeting, that Environment Minister Dick Roche be asked to further utilise and promote the island as a tourist attraction.
“This is an island which has great historical significance to Ireland, Kerry and Killarney,” he said.
“It is serene, peaceful and holy. This island was perfect for prayer, reflection and study and became the first university in Europe. Princes from all over Europe studied on this tidy island.”
Some of the Annals of Innisfallen, currently in a library in Oxford University, were written by monks on the island between 1015 and 1320, Cllr Grady added.
Cllr Courtney said signposts should be erected on the 22-acre island to help people make their way round it and point out important landmarks.
South Kerry Independent Alliance Cllr Michael Gleeson called for renewed attempts to get the Annals of Innisfallen back to Killarney, even on a temporary basis.
Meanwhile, a microfilm of the Annals of Innisfallen, secured by Killarney Town Council, is due to be launched in September.