Canals have historically formed the economic backbone of regions by connecting areas of production to urban markets. Britain, in particular, boasted over 4,000 miles of navigable waterways during the ‘Golden Age’ of canals (1760 to 1830). However, with competition from faster modes of transport, canals faced neglect resulting in economic and environmental decline. A push to revitalise these waterways as heritage tourism sites has resulted in a number of new tourism opportunities. By assessing the developmental process of two canal heritage sites, this research evaluates community capacity, defined as the underlying community resources utilised to develop tourism attractions. Using a grounded theory approach, this project analysed written documentation including reports, memos, meeting minutes and notes taken by advisors, to provide a theoretical understanding of community capacity by assessing community participation/leadership, skills, resources, social/inter-organisational networks, sense of community, community history, community power, and community values needed to succeed in tourism development.