Master thesis consists of a theoretical and empirical part. The theoretical part of the thesis shows importance of tourism and its’ positive and negative impacts, especially in island economies, and also explains why island economies are specific tourist destinations. Further, the role of local community in tourism development is explained, together with importance of participation of local community in issues related to tourism development and destination image. Also, thetheoretical part shows ways of empowering the local community to participate in tourism development. Since the empirical part of thesis is based on the results of research conducted on the inhabitants of the island of Korčula, in the theoretical part the geographical features of the island, the development of tourism so far as well as tourist offer and demand are presented. In the empirical part of the thesis results of the research are presented to find out the opinion of the local community and the representatives of local tourist boards about issues related to the development of tourism and the brand image of the island of Korčula. Based on the results of the research, it was concluded that the island of Korčula has the image of a Mediterranean destination with rich history and culture, but despite the positive impression that it leaves on the visitors, it has to achieve better position in a competitive tourist market. The most important factors for achieving this goal are the development of digital marketing and promotion of the destination, as well as strengthening the cooperation between local tourism stakeholders. Based on the research conducted in the thesis, opportunities, limitations and guidelines for further strengthening of the cooperation between local tourism stakeholders are presented, as well as the importance of empowering local community participation in issues related to tourism development.