She told the minister in a parliamentary committee yesterday that a privately owned island should not be a priority when pest control was a "stretched resource".
Ms Dyson questioned how protecting the isolated, private spot fitted with the department's larger conservation goals.
Sir Michael, a merchant banker, has a home on Great Mercury Island and allows public access to the land.
Conservation Minister Nick Smith defended the use of $750,000 on helicopter poison drops and trapping to protect that land.
He said private partnerships helped underfunded projects to get off the ground, but did not influence DoC's priorities or advocacy work.
"I don't think our native species care too much as to whether it is public land or private land. Whether it be iwi, or whether it be Sir Michael Fay, what we're interested in in these partnerships is maximising conservation gain."
Dr Smith said "the moment you mention Sir Michael Fay you get all sorts of prejudiced views", and noted that the Government also carried out pest control schemes on land owned by iwi. He also pointed to DoC's partnership with entrepreneur Gareth Morgan to clear pests from the Antipodes Islands, though this was on public, not private land.
Project manager Peter Corson said DoC had wanted to rid Great Mercury of pests for 20 years. The surrounding six islands had already been cleared.
"The Conservation Department couldn't have done this by itself and Great Mercury Island couldn't have done this by themselves," he said.
The 1872ha island is home to native species such as Pycrofts petrels, grey-faced petrels, native geckos, giant tusked weta, tuatara, kaka, kakariki, 50 species of native land snail and threatened native plants.
A spokesman said DoC's capacity had not been limited by the Great Mercury project.
Sir Michael could not be reached for comment yesterday.
Great Mercury Island
• Largest of the seven Mercury Islands, 35km northeast of Whitianga.
• 1872 hectares, split into forestry, sheep and beef farming, native forest, wetlands and dunes.
• Home to native birds, lizards, insects and snails.
• Owned by Sir Michael Fay and David Richwhite.
• Can be hired for $20k a day.