While Cyprus is a significant destination, it is mainly characterised by mass tourism, focusing on seascape and leaving rural areas undeveloped. This situation, creates challenges related to its sustainability, such as unequal development, impacts on residents' well-being, and decreased competitiveness. Employing a qualitative research approach, through interviews with fourteen policy makers, high-level administrators, and tourist officials, as well as document analysis, the study examines the role of Cyprus' rural tourism on its residents' well-being. Findings indicate that Cyprus' rural tourism takes the forms of agricultural, cultural and religious, nature-based, and event tourism. While rural tourism is recognised as a sustainable niche, challenges such as its fragmented nature, inappropriate management, lack of knowledge, and microinterests, hinder its appreciation. The paper concludes with a framework suggesting three strategies that will lead to the islands' competitiveness and residents' well-being: Integrated Rural Tourism, valorisation of social entrepreneurship, and identification of rural destinations' capitals.