Hide treasure finally in South Island (7)
I believe the answer is:
secrete
'hide' is the definition.
(I know this)
'treasure finally in south island' is the wordplay.
'finally' says to take the final letters.
'in' is an insertion indicator.
'south' becomes 'S' (abbreviation).
'island' becomes 'crete' (Greek island).
The final letter of 'treasure' is 'e'.
's'+'crete'='screte'
'e' placed inside 'screte' is 'SECRETE'.
(Other definitions for secrete that I've seen before include "Hide - discharge" , "squirrel" , "Hide or conceal an object" , "Release bodily fluid" , "Hide away" .)