This study aims to examine the empowerment of local communities as tourism operators, as well as to analyze their perceptions of the economic impacts on Pulau Perhentian. The study used quantitative method involving 150 respondents comprising local communities working as tour operators. The respondents were recruited using purposive sampling and snowball technique. The findings reveal that the majority of tourism operators are male, aged between 25 to 44, with secondary level of education and married. Most of the operators have been managing their business for 16 to 20 years and have earned an estimated monthly income of RM1001. 00 to RM2000. 00. The study concludes that the tourism sector has contributed to: a) reducing unemployment rate, b) providing employment opportunities for women and single mothers, c) encouraging the involvement of local communities in the field of tourism entrepreneurial, e) generating income to communities, f) attracting foreign investors to invest, and g) reducing poverty rate. However, local communities are also affected by the negative impacts of the tourism sector such as: a) rising prices for goods and services, b) rising cost of living, and c) increasing the value of real estate and rental rates. This study is hoped to provide useful insights into the tourism entrepreneurship at Pulau Perhentian so that the government can take necessary actions in improving the sector.