Community based tourism (CBT) could be one way of creating a more sustainable tourism industry. This article critically reviews the CBT approach in light of fieldwork in a North Queensland tourism destination. The literature on CBT has three major failings from a community development perspective. Firstly, it tends to take a functional approach to community involvement; secondly, it tends to treat the host community as a homogeneous bloc; and thirdly, it neglects the structural constraints to local control of the tourism industry. Attention to these issues could contribute to a more sustainable and equitable tourism industry.