Tourism is an economic development means to eliminate poverty and vitalize socio-economic wellbeing, it has profound impact on the local community of the area as it takes socio-cultural and economic variations. The current study investigated the socio-economic and environmental impact of tourism development around Harnoi Lake on local people of rural area of Abbottabad and the issues local community is facing due to tourism development. Qualitative research method was used for field data collection by conducting interviews. This study attempts to get general view of impacts of tourism through semi-structured interviews from residents of the study area. Convenience sampling method was used for the samples that are taken from shopkeepers, employees of hotels and restaurants near Harnoi lake. Snowball sampling method was used to collect data from residents, while purposive sampling was used to collect data from government officials. The research shows that tourism development has substantial socio-economic and environmental impact on local people. The findings suggest that the residents appreciated tourism for increasing job opportunities, development of recreational facilities, creating positive feeling about area among tourists and enhancing social relationship between residents and tourists. However, unplanned, and unbridled development of tourism in Harnoi in past years has led to extensive environmental degradation, devastation of tourism resources and has intensified increasing the cost of living of local people. It is recommended that Strict policy implementation by government and combined effort by local community and tourism department is required to overcome the issues faced by local community, there is a dire need to work on priority basis to maximize the positive impacts of tourism. Supervisor: Mr. Fida Muhammad Co-supervisor: Dr. Jahangir khan