Tourism is a rapidly developing industry in ecologically sensitive remote areas, especially in developing countries. Although a lucrative livelihood alternative, it is often responsible for degrading the environment and stratifying the socio-economic setup, if not managed prudently. We assessed the impact of tourism on ecological integrity and local livelihood in wetlands of Changthang Wildlife Sanctuary (CWLS), Indian Trans-Himalaya. Change in behaviour of wetland birds was studied using flight initiation distance (FID) approach to understand the ecological sensitivity of CWLS. We evaluated livelihood contribution of tourism and attitude of local people towards tourism as a futuristic livelihood opportunity using questionnaire-based interviews and focus group discussions. Although traditional communities of CWLS see tourism as a livelihood opportunity; they are still sceptical about its effectiveness and indicated leakage of tourism benefits. People were also dubious about its impact on their socio-cultural and environmental structure. FID estimates have shown level of sensitivity among wetland birds towards presence of tourists. We recommend, site-specific FID based ‘minimum approach distances’ of most sensitive species for delineating buffers around wetlands to ensure no disturbance to waterbirds. Community managed nature-based tourism is suggested to maximise the tourism benefits to local people. Prototypical sustainable tourism activities should be endorsed in the region that can elicit advancement of local economy and efficacy of conservation efforts.