Coastal tourism has emerged as a major driver of economic growth in Sindhudurg district, Maharashtra, owing to its rich natural resources, cultural heritage, and recreational attractions. Despite its vast tourism potential, the district faces various challenges, including infrastructural limitations, environmental degradation, seasonal fluctuations, and inadequate policy implementation. This study examines the challenges and opportunities of coastal tourism development in Sindhudurg through a mixed-methods research design comprising field surveys, interviews, secondary data analysis, and spatial assessment. Primary data were collected from residents, tourism stakeholders, tourists, and government officials using structured questionnaires and interviews. Secondary data on tourist inflow from 2015–2025 reveal fluctuations caused by economic changes, limited connectivity, and major disruptions such as the COVID-19 pandemic. The study evaluates the influence of government interventions including Sindhudurg’s designation as a tourism district, Chipi Airport development, and coastal regulation policies on tourism prospects. Findings indicate that sustainable tourism avenues such as marine ecotourism, community-based tourism, cultural tourism, and adventure activities hold strong potential for long-term development. However, infrastructural gaps, uneven economic benefits, and environmental pressures continue to hinder sustainable growth. The study highlights the need for integrated planning, enhanced community participation, and stronger policy implementation to promote balanced and sustainable coastal tourism in Sindhudurg.