Islands commonly face a number of structural handicaps arising from their isolated and peripheral location, and their smallness in terms of population and area. Among the most serious problems characterizing many of these environments are their limited resource base, tiny domestic markets, diseconomies of scale, poor accessibility, limited infrastructure and institutional mechanisms, and a high degree of dependency on external forces. Tourism is often more important for small islands than for mainland destinations, since tourism is invariably a larger and more significant part of the island destination’s economy. If tourism is main part of island`s economy, it must be under constant control because tourism has bigger economic, socio-cultural and enviromental impact on islands than on the mainland. Tourism has many displays of a positive impact on an island’s development, such as: significant contribution in the island’s GDP, diversification of economy, increased employment, preservation of environment, etc. However, there are also negative impacts: overdependence on tourism, seasonality, competition for resources, land and labour, etc. Islands, whose economical activity is oriented towards tourism, should mainatain a concept of sustainable development. The primariy conditions of sustainable development are resource management aimed at fulfilling economical and social needs as well as preservation of cultural, ecological and biological diversity. Ecotourism is a key part of tourism, which in turn demands that the principles of sustainability must be applied on all kinds of activities in tourism. The sustainable development on Croatian islands should follow the island’s traditional way of life, which has been based on sea and land as a source of existence. The culture of the island’s fishermen can’t be presented to a tourist if it doesn’t exist. Tradition should be maintained and enriched.