Killarney Town Council has voted to rezone land on the edge of Killarney National Park, part of the remaining McShain estate.
Six councillors voted for the rezoning with three against.
The controversial rezoning will pave the way for a low-density housing development in an amenity area of special control at Ross Road. The area once formed part of the thousands of acres of lake, land, mountain and a historic building belonging to the late John McShain, an American builder and philanthropist.
It is the fifth time the subject has come before the council.
Those voting for the proposal include Fáilte Ireland director Cllr Patrick O'Donoghue.
The rezoning proposal at Reen, Ross Road, will now go before the public for a period of not less than four weeks when it will come back to the council for a final vote.
Already, the oldest conservation group in the area has vowed to object to and appeal any grant of planning. Ms Rose Barnes, chairwoman of Killarney Nature Conservation Group, said there was little point in the council adopting a town plan if members were going to amend it, as in this case, just three months later.
There could be no guarantee the rezoned lands would remain low-density housing.
She also warned that interfering with the buffer zone there would lead to breaches in other areas between the town and the Killarney National Park. There was already a planning application by a major hotel on the lake side of the Muckross Road, she said.
The mayor of Killarney, Cllr Michael Courtney (Ind), warned members the rezoning was "development-driven and it would make worthless land worth millions". If they relented on the zoning at Ross Road, Cahernane and other prime areas near the lake would be developed. The longest-serving member of the town council, Mr Courtney reminded members they were in fact rezoning a buffer zone that had been put in place by previous councils when granting the McShains other planning permission along Ross Road, a prime residential area.
The McShains had sold the lands that formed much of the national park to the State - they had not donated it. They had got over £1 million in 1983.
The town's other benefactors, the Vincents, had given the Muckross estates without demanding as much as a blade of grass in return.
Mr Michael O'Leary, town clerk, agreed on behalf of the executive to "open the McShain files" to the members.
However, Cllr Pat F. O'Connor (FF), who led the rezoning motion, seconded by Cllr Seán Counihan (Lab), said there was a goodwill agreement that almost 15 acres would be handed over to the Killarney National Park and the derelict Reen Cottage, now an eyesore belonging to the McShain estate, would be renovated by the family. A sewage percolation problem in the area could also now be addressed.
Cllr Seán Counihan said the rezoning was "an exceptionally good deal for the town".
A large public attendance, including residents of Ross Road opposed to the development, members of the Green Party and conservation groups were in the gallery.