The Covid-19 lockdown has brought the Diocese of Sodor and Man "to the brink of financial ruin", a report has said.
The Diocesan Strategy for Church Buildings review said lost income during lockdown meant the diocese could "run out of money" within five years.
As a result, some of the Church of England's 41 churches on the Isle of Man may be closed or sold, it said.
The Bishop of Sodor and Man said the diocese must be "realistic about what we can afford [and] what we need".
The report was originally commissioned to look at the "dwindling" funding from parish churches, but its authors said its release had been brought forward due to the "catastrophic" financial consequences of the Covid-19 lockdown.
It found that the development of housing estates on the island had left some churches "firmly planted in the wrong place" and hosting falling congregations.
It also said that due to staffing being higher per capita than the Church of England average and parishes being smaller, the diocese needed "higher levels of giving to pay for our stipendiary clergy".
The document said the diocese received about 75% of its income through donations, which was why the lockdown had hit it so hard.
'Radical new uses'
It said many parishes were "beginning to lose the [financial] struggle, and too many buildings is proving an unsustainable drain on resources", adding: "Holding on to buildings regardless of all other considerations will be disastrous."
It concluded that there was "widespread acceptance" that the diocese "can't afford all the church buildings we currently have".
The report recommended that each parish should replace "unprofitable" church halls with a single multi-use "hub church" and smaller parishes should consider limited opening during the winter to save money.
It said historically-significant churches should be maintained by "friends" groups, while buildings at a "crossroads" - such as those with a "dispersed congregation" or a local population which does not "relate to the church" - should face "closure, sale, demolition or radical new uses".
It also said only parishes with a population above 6,000 should have stipendiary clergy, which could mean smaller parishes having to merge with a neighbour, but the diocese should not reduce numbers "below current levels or we may cease to be functional".
The Right Reverend Peter Eagles said the diocese now needed to be "realistic about what we can afford, what we need, what is essential, and what might actually be better purposed doing other things".
Buildings will now be categorised before the bishop makes a final decision on the future of each.