This paper defines the concept of cultural tourism, how its supply and demand moves, and analyzes how it affects the country's development, its economic situation, and the local population. It starts from the assumption that cultural tourism, through elements of valorisation and encouragement of different cultural events, has a positive effect on the development of cultural resources. The interest for cultural tourism is steadily growing, attracting an increasing number of tourists, which can have a positive but also a negative impact on tourism. To reduce the negative effects of tourism, international organizations like WTO, UNESCO and ICOMOS have been responsible for the promotion and sustainable development of cultural tourism. Investing in better interpretation, education on cultural and natural values and ecological awareness can increase the number of positive and reduce the number of negative effects. However, in order for a country to have the potential for a successful development of cultural tourism, it should have a rich cultural base, or have a variety of cultural resources. In this paper is used an example of Croatia, as a small country with exceptional potential for the development of cultural tourism. Croatia by investing in the development of tourism and also by creating the quality programs, strategies and precise goals can create an unique destination image. The aim of this paper is to emphasize the importance of sustainable development of cultural tourism in order to preserve cultural objects and enable a more successful development and the future of the country.