The principal of Victoria's largest Islamic school tells students not to join Islamic State because it is a plot by Western countries.

Al-Taqwa College principal Omar Hallak told The Age he believed IS was a scheme by Israel and America to control oil in the Middle East. But he said he did not explicitly mention these countries to students, instead telling them some Western countries were behind IS.

"They are trained and equipped by them: [the] evidence is all the shiny new equipment," he said. "We don't believe Muslims are creating IS."

Mr Hallak said killing innocent people was not "the Islamic way".