On-site development of wave energy resources is a promising way to overcome power-shortage problems on islands. It is necessary to select suitable islands to deploy wave power plants, which are influenced by multiple factors related to resources, technology, economy, society, and environment. This study develops a two-stage decision framework to identify feasible islands and determine priority order based on geographic information systems (GIS) and multicriteria decision-making (MCDM). In the exclusion stage, unfeasible marine areas are excluded based on exclusion criteria and feasible island alternatives are identified. In the evaluation stage, alternatives are evaluated by evaluation criteria using the combined weighting method and the technique for order of preference by similarity to ideal solution (TOPSIS)-grey relation analysis (GRA) method. As the combined weighting method is based on the fuzzy group decision-making (GDM)-analytic hierarchy process (AHP) and the entropy method, it can effectively reduce subjective deviation. The proposed framework is applied in Shandong Province. It identifies 13 inhabited islands feasible for constructing wave power plants, among which Daguan, South Changshan, and Xiaoguan are the optimal ones. Sensitivity analysis is performed to verify the feasibility of the proposed framework. The results show that it is effective and could provide reference for practical engineering.