Controlled islanding of a large electric power system is proposed under rare circumstances as a measure of last resort to avoid a catastrophic blackout. Controlled islanding appears to be more desirable than uncontrolled islanding. A separate power system operating objective is the retention of synchronous operation of the entire system to ensure the viability of power markets. The problem of when to initiate controlled islanding, accounting for power marketing objectives is formulated as a multiobjective optimization. Pareto optimization is applied in the form of the calculation of a Pareto surface. This formulation may allow power system operators to manage the multiobjectives of mitigating the possibility of a blackout versus the full enabling of power markets. This is a conceptual paper in which the analytical basis and the main points of the solution of when to initiate controlled islanding are outlined. The objective function recommended for the capture of transient stability is the transient stability load margin.