Rural tourism represents one of the key activities within the neo endogenous development of rural areas in Croatia. This type of development takes a complementary approach to the dimensions of sustainability, such as economic prosperity, the quality of life of the local community, environmental conservation, and political participation of inhabitants. This paper explores the perspectives of rural tourism on the island of Hvar based on insider insights from local entrepreneurs and residents living on the island. The specific research objectives include: 1. examining the motivation and satisfaction of entrepreneurs engaged in rural tourism, 2. assessing the intentions of Hvar’s residents regarding participation in this sector, and 3. evaluating its contributions to neo endogenous rural development. The research was conducted in 2024. A structured interview method covered nine entrepreneurs, while a survey method included 246 residents of Hvar. The interviewed entrepreneurs highlight the recognition of market opportunities (such as attachment to nature and the value of rural culture) as one of the key motives for engaging in rural tourism. Most of them possess certain assets that can be revalorized through tourism. These economic orientations are accompanied by a strong attachment to the island’s way of life. Entrepreneurs express satisfaction with their business and consider it sustainable. Survey respondents also recognize the potential of rural tourism 79.8% keep the possibility of engaging in this activity open for the future. These results are influenced by the perception of nearly half of the respondents (48.8%) that rural tourism has a significant impact on the neo endogenous development of Hvar, while one fifth (20.3%) believe its impact is particularly strong. Despite certain positive effects of this type of tourism on all examined dimensions of sustainability, there is a lack of a systematic approach to rural tourism management to achieve optimal results. Such a systematic approach arises from the networking of entrepreneurs, cooperation with local residents, and the creation of vertical networks with different levels of political authority. The findings suggest that initial development initiatives in less developed rural communities should be externally stimulated (e.g., by relevant ministries, the European Union, experts, etc.) to gradually strengthen self development capacities.