Tourism is one of the fastest-growing industries in the world and plays a significant role in economic development, employment generation, and cultural exchange. Among the various states, Karnataka holds a prominent position due to its rich cultural heritage, diverse geography, and historical significance. Tourism development in Karnataka has gained importance in recent years due to its potential to generate revenue, create employment opportunities, and promote regional development. Karnataka, with its rich cultural heritage, diverse geography, and historical significance, occupies a prominent position in India’s tourism landscape. Tourist arrivals in Karnataka have shown remarkable growth, reaching a record 35.31 crore in 2024, reflecting strong recovery post-pandemic and the impact of proactive government policies. Despite its vast potential, the tourism sector in Karnataka faces several challenges, including inadequate infrastructure, poor administration, weak marketing strategies, safety concerns, and skill shortages. To address these issues, the Government of Karnataka has introduced successive tourism policies, most recently the Karnataka Tourism Policy 2024–29, which aims to position the state among the top three destinations in India by 2029. In this context, the present study examines the status of tourism in Karnataka, identifies key challenges hindering its growth, and evaluates government initiatives designed to overcome these barriers. It highlights the prospects of tourism as a driver of socio-economic development, foreign exchange earnings, and community empowerment. The findings suggest that with improved governance, infrastructure development, heritage conservation, and effective promotion strategies, Karnataka can transform into a global tourism hub and leverage its diverse resources for inclusive and sustainable growth.