Purpose Island entrepreneurship is a relatively new research direction within entrepreneurship research. Most previous research has focused on empirical studies in specific island contexts. The purpose of this article is to (1) investigate how island entrepreneurship has been explored, (2) develop a theoretical foundation for conceptualising island entrepreneurship through the lens of entrepreneurial ecosystems theory and (3) propose a set of future research directions to advance the field. Design/methodology/approach This article employs a literature review methodology, analysing 89 articles through text analysis. The analysis identified 18 interrelated categories and then organised them into seven overarching themes. Findings Many studies highlight the key role of collective action and cooperation as prerequisites for entrepreneurial success. The main finding is that the entrepreneurial ecosystems approach can serve as an umbrella for addressing various research gaps, complex contexts and settings influencing entrepreneurial interactions, resource use and the type of local institutions that either support or hamper entrepreneurial activities on islands. This approach generates new knowledge to promote actionable entrepreneurial solutions and policies for islands. Originality/value The paper’s originality lies in applying the entrepreneurial ecosystems approach to the specific context of island entrepreneurship. It offers a holistic perspective that addresses previously underexplored complexities, such as interactions between entrepreneurs, resource usage and the role of local institutions on islands.