<p>Community-based tourism (CBT) has emerged as a significant driver of sustainable development, particularly in rural areas where mainstream economic opportunities are limited. This study examines the impact of CBT on the Gujjar and Bakarwal communities in the Shopian District, Jammu and Kashmir. A self-administered questionnaire survey was conducted among 400 respondents, with data analyzed using advanced statistical techniques, including factor analysis, correlation, and regression analysis. Factor analysis indicates economic benefits as the most significant (23.76% variance), followed by socio-cultural (14.87%) and environmental factors (11.86%). A strong positive correlation was identified between these factors and improvements in quality of life, with CBT accounting for 70.1% of the observed changes. The implementation of CBT contributed to higher household income, enhanced infrastructure, and greater access to education. The study also highlights a positive feedback loop, where improved well-being fosters greater community support for tourism development. These findings provide actionable insights for local governments, tourism boards, and NGOs, emphasizing CBT’s potential to enhance rural livelihoods and cultural preservation. The study concludes by recommending improvements in local infrastructure, sustainable tourism practices, and community involvement to enhance the success of CBT in the region.</p>