Linkin g tourism and the local economy is one of the strategies to increase the economicrnbenefits of tourism to a certain destination and to distribute the revenue from tourism to thernlocal communit y. However , because of various challenges, it has now become difficult to linkrntour ism and the lo ca l economy in and around Bahir Dar. This research was conducted with thernmain obj ect ive of assess in g the chall enges which affect the linkages of tourism and the localrneco nom y in and around Bahir Dar. The research design for the study is descriptive. Thernresearch instruments used for gathering qualitative data were interviews, informal discussion,rndoc um en t analy sis and personal observation; the qu antitative one was gathered throughrnqu esti onn air es. A total o f 78 subjects (60 for interview and 18 for questionnaire) werernselected . Data ga th ered through qualitative methods were narrated; and the one throughrnquestionna ir es were tabulated and described in frequencies and percentages . The localrnpr oducts available in and aro und Bahir Dar include agricultural products, souvenirs,rnma np ower, tr ansport service, traditional ni ght clubs, textile, etc. The challenges which affectrnt he s upply of local products for the tourism industry were related to low production capacity,rnlack of orga ni zat ion of loca ls and poor quality of products in the study area. In addition,rnabsence of standard faciliti es and services such as food and drink outlets at some sites andrnfailin g to deve lop potentia l attracti ons and activities is another challenge to link tourism andrnthe local eco nomy . Hot els, lod ges Â·and restaurants in the town could not get sufficient localrnagric ultural products. These establi s hments, with the exception of few, don't participate inrnne ighborhood partners hip s that can benefit the local economy. In order to create and increasernth e lin kages between touri sm a nd th e local economy, there is a need to increa se localrnproduction in ter ms of qu al it y and qu antity, ex pand tourist facilities and attractions and focusrnon local products by tou ri sm bu s in esses.rnKey WordsrnTourism, challenges, local pr oducts, local economy, }Jahir Dar