In a region like Ladakh which is an arid, high altitude, ecologically fragile, strategically located, culturally rich but sensitive area known for its unique Tibetan Buddhist culture, tourism was abruptly introduced with inadequate planning primarily to foster economic development and growth. In a short span of about two-and-a-half decades the self-sufficient agricultural economy following the barter system of trade has been converted to a cash economy, with a high dependence on the tourist industry for revenue and employment generation. It has also resulted in the degradation of physical and socio-cultural environment, which is the prime attraction for tourists. If this trend continues tourists will no longer be motivated to visit this region thus adversely impacting the tourism industry and consequently the economy of the region. Ways have to be found where tourism and environment can co-exist without damaging each other. The need of the hour is to formulate, develop and implement a pragmatic policy of sustainable tourism with the help and active participation of the local community by adopting the ‘bottom-up’ approach.