We present a systematic analysis of diffusion-controlled evolution and collapse of two identical spatially separated d-dimensional A-particle islands in the B-particle sea at propagation of the sharp reaction front A + B → 0 at equal species diffusivities. We show that at a sufficiently large initial distance between the centers of islands 2ℓ compared to their characteristic initial size and a relatively large initial ratio of concentrations island/sea the evolution dynamics of the island-seaisland system is determined unambiguously by the dimensionless parameter Λ = N0/NΩ, where N0 is the initial particle number in the island and NΩ is the initial number of sea particles in the volume Ω = (2ℓ) d . It is established that a) there is a d-dependent critical value Λ⋆ above which island coalescence occurs; b) regardless of d the centers of each of the islands move towards each other along a universal trajectory merging in a united center at the d-dependent critical value Λs ≥ Λ⋆; c) in one-dimensional systems Λ⋆ = Λs, therefore at Λ < Λ⋆ each of the islands dies individually, whereas at Λ > Λ⋆ coalescence is completed by collapse of a single-centered island in the system center; d) in two-and three-dimensional systems in the range Λ⋆ < Λ < Λs coalescence is accompanied by subsequent fragmentation of a two-centered island and is completed by individual collapse of each of the islands. We discuss a detailed picture of coalescence, fragmentation and collapse of islands focusing on evolution of their shape and on behavior of the relative width of the reaction front at the final collapse stage and in the vicinity of starting coalescence and fragmentation points. We demonstrate that in a wide range of parameters the front remains sharp up to a narrow vicinity of the coalescence, fragmentation and collapse points. PACS numbers: 05.70.Ln, 82.20.-w R = Jδ(x − x f ).