Tourism is a significant economic driver for many inhabited islands, yet these regions often face a paradox. Some islands struggle with the adverse effects of mass tourism, such as environmental degradation, cultural disruption, and pressure on local infrastructure. Others, particularly those in rural and peripheral areas, grapple with economic underdevelopment. While tourism undeniably contributes to economic prosperity, it also puts considerable strain on island environments and cultures. Contextually, to address these challenges, rural tourism development offers a promising avenue for sustainable growth. This research examines islanders’ perspectives on the key players in rural tourism development and its impact on regional progress, focusing on two contrasting archipelagos: the Azores and the Croatian islands. The Azores, an ultra-peripheral island group, and the Croatian islands, located near the coast, each experience unique dynamics due to their geographical positions. In sum, by analyzing the positive and negative impacts on these islands’ economic, environmental, cultural, and social dimensions, we aim to offer guidelines for promoting sustainable tourism development in the post-COVID era.