The collision happened on Junction Road, near the Orkney Library and Archive building in Kirkwall, at around 3.55pm on Wednesday, May 19.
The 87-year-old was driving a black Smart car which was involved in a collision with a blue Audi S3.
The man driving the Audi was not injured and there was no-one else in the Smart car.
Officers from the Highland and Islands Road Policing Unit in Dingwall are currently in Orkney to investigate the incident and appealed for information.
Sergeant David Miller said: “Our thoughts are with the man’s family and friends and everyone affected by this incident.
“We are working to establish the full circumstances which led to this crash and I would urge anyone who may be able to help to come forward.
“We would also be keen to speak to anyone who may have dashcam footage from the area around the time of the crash on Wednesday afternoon.
“Anyone who can help is asked to call 101, quoting incident 2294 of May 19.”