Tourism is one of the largest and dynamically developing sectors of external activities. Its high rate of growth and development and continual research, actively affects various sectors of the society and individual’s life as well. Being an industry of multiple facets of operation the area of its impact tends to be of a larger span. The major objective of the research was to study and analyse the residents’ perception of the impact of tourism development at “Kantillo”- a small village of varied tourist importance and to trace out the source of these impacts. The study involved direct interaction with the local residents and a field survey to assess the impact of tourism development on the local residents. The impacts were studied under seven categories that revealed that residents perceived major positive impacts within the economic sphere, transport infrastructure and improved quality of service infrastructure where as overall perceptions of negative impact being associated with environmental pollution, loss of open space, overcrowding and monuments degradation. The study further revealed that there is a substantial support for further tourism development and increased visitation levels. The majority of the local residents hold that tourism has a positive effect on the local community. The major sources of these impacts were also found out to be of two major categories i.e. tourist based and destination based factors. Finally the suggestive measures in order to create a more sustainable development in the region would definitely help to reduce the negative impacts of tourism development.