The Shetland Islands Council voted overwhelmingly in favour of a motion proposing the rugged islands' politicians begin exploring ways of "achieving financial and political self-determination".
The move could lead to a referendum on independence from the Scottish mainland.
Councillors voted 18 to two in favour of a motion which argued that centralised decision-making by the SNP at Holyrood, and funding cuts handed to the islands by an SNP Government, were reasons to seek political and financial independence.
The islands are geographically closer to Scandinavia than Edinburgh, and would potentially be wealthy as a separate financial entity due to their fishing and tourism activities.
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The motion, signed by council leader Steven Coutts and convener Malcolm Bell, said: "We are concerned that this ongoing situation is seriously threatening the prosperity and even basic sustainability of Shetland as a community."
Mr Coutts suggested devolution has not benefited the area and said the Scottish Parliament feels "remote" to islanders, who face some of the highest rates of fuel poverty in the country.
He added the levels of funding for ferries "negatively impacts on Shetland and everyone of Shetland", although the Scottish Government said it has provided more than Â£15 million for ferry services over the last three years.
Speaking to the PA news agency after the vote, Mr Coutts welcomed the result and said the council planned to speak to the UK and Scottish Governments next week about options for Shetland's self-determination.
"The status quo is not working," he said. "I hope they recognise the challenges of living in Shetland, like the high cost of living, but also the incredible opportunities political and financial self-determination could bring."
Another councillor, John Fraser, insisted that the 22-member chamber was not making any decision "on the constitutional future of Shetland", only a decision to formally begin "exploring options".
Responding to the vote, islands minister Paul Wheelhouse said neither Shetland nor any other island council had submitted any request for further powers under Additional Powers Request (Scotland) Regulations introduced last year.
It comes after Scotland's First Minister, Nicola Sturgeon, insisted that she is still hoping for a second independence referendum for Scotland.
She told the BBC's Andrew Marr this summer that she believed the SNP's handling of the coronavirus pandemic had been an example of "show don't tell" for independence, and that support for Scotland leaving the UK had increased in recent months.