2-iodo-5-methylbenzene-1,3-diol is primarily utilized in organic synthesis as a building block for more complex chemical structures. It serves as a key intermediate in the production of pharmaceuticals, particularly in the development of antimicrobial and antifungal agents. Its unique structure allows for selective iodination, which is valuable in creating compounds with specific biological activities. Additionally, it is employed in the synthesis of dyes and pigments, where its phenolic and iodine groups contribute to color stability and intensity. In research, it is used to study reaction mechanisms involving halogenated phenols, aiding in the exploration of new synthetic pathways.