Shan-Mei, a Tsou aboriginal village in Taiwan, is widely known as a legend of environmental conservation, where ecotourism has been successfully combined with integrated community development. Indigenous knowledge containing "ecological wisdom" and decision-making based on consensus are perceived to be the greatest contributors to this achievement. I conducted three months of fieldwork in Shan-Mei, primarily using the methods of participant observation and semi-structured interviews. The purpose of this study was to reexamine the ecotourism and community development in Shan-Mei. I found that the ecotourism project is ecologically based, but not ecologically sound. With a combination of nature-based tourism and ethnic tourism, and later expansion into mass tourism, Shan-Mei's ecotourism project yielded negative environmental impacts. The unplanned development of mass tourism especially brought overcrowding that endangered a fragile fish species and the surrounding ecosystem. Lack of education about environmental issues created misperceptions among tourists and local people about the role of conservation in ecotourism. The community also faced problems of inappropriate government intervention, declining local participation in the project, and internal conflicts of interest. There was a need for better training and implementation of the interpretive program, professional assistance by outside experts for environmental assessment and planning, and better protection for indigenous rights in the laws of the nation state. This case illustrates that ecologically sound ecotourism not only requires indigenous knowledge but also expertise and legal protection that recognizes local autonomy. Despite the shortcomings, the Shan-Mei community was found to be proactive in creating a better future for its residents. The community used the revenue from ecotourism and government aid to establish its own social welfare program, fund various projects to revive traditional culture, assist agricultural development, and improve everyone's quality of life. The community benefited from ecotourism and community development in terms of inventing a hybrid Shan-Mei culture and forming a stronger sense of identity and autonomy. Shan-Mei provides invaluable lessons in its experience with ecotourism in its strategic adaptation to modernization. / Graduation date: 2002