By presenting village development policies in Indonesia, this study aims to provide a description of how policies institutionalize downstream economic development that places communities as the main subject of sustainable tourism. This research approach uses a qualitative descriptive approach. The data source comes from literature studies that have themes related to research. The results of this research show that Badan Usaha Milik Desa (BUMDes) plays a crucial role in realizing sustainable village tourism. This institution bridges economic growth and environmental preservation goals by empowering communities to market their products independently. BUMDes’ success depends on community participation, enabling more inclusive decision-making. It supports the development of independent businesses in villages, reducing dependency on external parties and enhancing economic self-sufficiency. Strengthening BUMDes management is essential for effectiveness in driving sustainable village tourism initiatives. Collaboration between BUMDes and local communities not only contributes to economic empowerment but also promotes environmental conservation practices within the tourism sector. This approach fosters a more integrated and sustainable village tourism policy. Future studies can delve into these parts through conceptual investigations to gain a more essential understanding in development and tourism studies. Apart from that, further research can expand the scope of the study, including making comparisons with village development policies in other countries.