For many Small Island Developing States (SIDS) tourism has emerged as a panacea for their inherent development constraints. This is certainly the case for the Maldives which is considered by many to be an example of ‘successful’ sustainable tourism development. It is within this context that this paper chronicles some of the key activities in the development of the Maldivian tourism industry. The paper argues that while tourism has done much to improve the overall economic situation of the country, the financial returns accrued from tourism flow out of the country, and those that are kept within the Maldives are not widely distributed amongst the local population. This paper illustrates that despite tourism being promoted as a sustainable development tool, local employment and subsequent increase in income of local communities has not been fully realized. Consequently tourism in the Maldives is not as ‘successful’ or ‘sustainable’ as it is often claimed to be