This paper explores the potentials and challenges of ecotourism development in Tawang, a remote district of Arunachal Pradesh, India. It also examines the trend in tourist arrivals, travel choice and expenditure pattern of the tourists based on secondary and field survey data collected from randomly selected 200 Indian tourists. The data were analysed by using statistical tools such as percentage, compound annual growth rate, line graph and pie diagram. The study revealed that Tawang has huge potentials for ecotourism development owing to its location in Eastern Himalayan ranges. Its landscape is extremely fascinating with presence of numerous snow-capped peaks, passes and lakes, historical sites and cultural heritage. However, the tourists inflow in Tawang has been fluctuating and its share in total tourist arrivals in the State has declined over the years. The travel choice of tourists indicated that most of the tourists visited this destination in a group of families mainly to enjoy natural beauty. The expenditure pattern indicated that tourists spent greater proportion on accommodation, transportation and food and beverages. The main challenges of ecotourism development were identified as inaccessibility, inadequate recreational facilities, entry restrictions, climatic constraints and socio-political disturbances. Hence, the policy should focus on improving connectivity, recreational facilities, quality of services and maintain clean and green environment.