Trials for the event, between 30 June and 2 July, clash with the Games.
The 400m runner, 20, shaved seven hundredths of a second off his island record on his way to winning the England Under-23 title on Sunday.
"He's now seeing that opportunity there for him," Guernsey team manager Tom Druce told BBC Sport.
"I think they've looked at the current landscape of running - some of the top guys aren't performing, quite frankly, so he's gone from a maybe to a probable [for the World Championships]."
Chalmers, who won the British Universities and Colleges Sport 400m title in a record time last month, had hoped to win three gold medals at the Gotland Games.
He will make his senior Great Britain debut at the European Team Championships this weekend, and has also been selected for the European Under-23 Championships in Poland next month.
His place in Guernsey's 4x400m Island Games relay squad has been taken by Peter Curtis.
"Peter's one of our most promising Under-17s, and he would have been named in the team anyway if we didn't already have two high-class 400m hurdlers," added Druce.
Guernsey sprinter Cameron Chalmers has pulled out of the Island Games to focus on securing a place at the World Championships in London in August.