"Of course the next development I hope is that Peter's going to devise, not more films, but a situation that you can all go to that is as much theatrical as cinematic," McKellen told reporters in London.
"A living museum where you will actually have the experience - as you sometimes do in the greatest exhibitions of that sort in Hollywood - to go into that and be there."
Jackson was quick to insist he'd need a holiday first.
The Battle of the Five Armies is the end of his 16-year journey to bring Tolkien's Middle-earth to the big screen.
The film's cast thinks people would flock to a Middle-earth theme park.
"They come to Hobbiton in their droves so I'm sure there are enough fans of the films that would come to see a Hobbit theme park or a Lord of the Rings theme park," Martin Freeman, who plays Bilbo Baggins, told AAP.
"I loved New Zealand and I loved working and living there. Some of the most beautiful places I've ever seen were there.
"They have an amazing range of vistas and landscapes, good food, good coffee, good wine ... I loved being there."
Richard Armitage, perhaps the tallest man to ever play a dwarf in Thorin Oakenshield, is another backing McKellen's plan.
"I'm pretty certain that if he (Peter) opened Hobbit World or Middle-earth, yeah, they'd be flocking down there," Armitage told AAP.
"And I'd be the first one on the barrel ride."
Fellow British actor Luke Evans (Bard the bowman) thinks people should head Down Under whether or not there's a theme park to visit.
"They should go to New Zealand anyway," he told AAP.
"It's worth a trip whether you like The Hobbit or not. It's a beautiful country - it really is an insanely beautiful place."
New Zealand was used as the sole filming location for The Lord of the Rings and The Hobbit movies.
McKellen says green screens were used far less often than people would suspect when Jackson created Middle-earth.
"We are actually there (as actors)," he said.
"It is snow falling on our boots, grass under our feet and the wind blowing in our faces."
* The Hobbit: The Battle of the Five Armies is out in cinemas now.