The Medical School received $620,000 earlier this month through the sale of 321 acres of land it owns in Chilmark, Martha's Vineyard.

Eugene G. Kraetzer Jr. '29, assistant secretary to the Corporation, said yesterday that the money will be used for research and teaching. The property was sold on March 2 to Land/Vest Inc., a Boston-based development corporation.

The transaction is important to Vineyard residents, who have expressed concern about how Harvard would dispose of the land. The property is one of the finest on the island, and some people fear that it might have been converted into a large development, the island newspaper, the Vineyard Gazette, reported last week.

Kraetzer said yesterday that the agreement reached with Land/Vest included "numerous restrictions" on the land, which he said is in an extremely attractive and fragile environment. "We were concerned about not despoiling the island," he said.

He said that the restrictions lowered the value of the property. In 1969, the value of 338 acres of the land was set at $1,347,000, assuming that all of the land could be built upon, Kraetzer said.

One of the restrictions on the property is that a maximum of 55 homesites be constructed. The Vineyard Open Land Foundation, an organization the College consulted, recommended several years ago that only 34 homesites be built.

The property was bequeathed to the University by Mrs. Charles R.L. Putnam in 1969, with the provision that it be sold and proceeds go to the Medical School.

Kraetzer said that two other pieces of land on the Vineyard, 25 and 16 acres in area, are still to be sold.