This study is to assess the challenges and prospects of sustainable tourism development in andrnaround Gorgora. Qualitative and quantitative research approaches were applied to achieve thernobjectives of the study. Data for the study were collected through questionnaire survey,rninterviews, field observatio n andfocus group discussion. The data generated we re analyzed usingrndescriptive statistics such as percentages and frequencies. The population of the study was madernup of the house hold heads in the stu dy area and tourists visited th e area during the survey.rnPurpOSive and convenience sampling technique were employed in selecting subjects for interviewrnand questionnaire survey from the total population. Results from this study indicated that therernare many tourism potential and possibilities in and around Gorgora besides its cultural andrnnatural al/racti ons including trekking, bird watching and camping. However, th e study revealedrnthat tourism in Gorgora peninsula does not have substantial and meaningfitl economic benefits tornthe local people; hence its sustainability in terms of sociO-economic, environmental and cultur alrnbenefits becomes questionable. Sustainable tourism development in the area was faced manyrncha llenges including absence of community involvement and participation in tourism businesses,rnabsence of conservational practices, lack of coordination and integration with key tourismrnstakeholders and absence of marketing and promotional activities. However, its diversifiedrncultural and natural al/ractions, its scenic location on th e shore of Lake Tana, th e involvement ofrnforeign investors in the hospitality industlY and the newly launched Asphalt road from Azeto tornGo rgora were the opportunities identified for the success of sustain able tourism development inrnand around Go rgora.rnKey words: sustainable tourism development, tourism benefits, tourism potelltial alldrnpossibilities, challe nges ami opportunities,future prospects.