The movie had a classical Greek island, which might or might not have actually been named Atlantis, and which is slowly sinking under the ocean. The main character, who is a visitor to the island, is somehow responsible - maybe the island sinks if the temple princesses lose their virginity, or something. The inhabitants of the island refuse to accept that it is sinking and just go about their business in ankle-deep water. Eventually the main character sails away and watches the island finally sink. There might have been some tragic story about how the princess has to stay behind to be with her people.

This was a 70s or 80s comedy, perhaps reminiscent of Monty Python in some way - I'm picturing Graham Chapman in the lead role, but I don't think that's actually correct. The main character might have been Jason or Odysseus or Perseus, or a pastiche of them; maybe they fought Medusa in another scene in the movie.