The purpose of this study was to examine conservation, livelihoods, and the role of tourism. The village of Sukau in the Kinabatangan District of Sabah, Malaysia, served as a case study. The vital importance of the Lower Kinabatangan in wildlife conservation, coupled with the tourism potential of the region, underpinned the creation of the Kinabatangan Wildlife Sanctuary in 2005. The 26,000 hectare sanctuary is fragmented in nature and surrounded by palm oil plantations. Still, with the protection of these fragmented forested areas, Sukau has evolved into the ‘hub’ of tourism in the Lower Kinabatangan. The majority of visitors come to Sukau for the opportunity to view the flagship species of the Kinabatangan Wildlife Sanctuary (orang-utan, Bornean pygmy elephant, proboscis monkey, and hornbills) in the wild. Many of the local villagers own land which is still forested and serves as important ecological links between the fragmented protected areas. However many of the villagers plan to use their lands for smallholder palm oil farming in the future. This will further fragment the forested areas of the Wildlife Sanctuary, and will have severe implications for nature conservation and tourism in Sukau. The Sabah Tourism Master Plan (1996) stresses that for the tourism-conservation linkage to be effective in Sukau, the local community must benefit from tourism. If the locals of Sukau are able to depend on tourism as a livelihood option, then perhaps the forested areas of the Wildlife Sanctuary will not be further fragmented in the near future. This study will attempt to answer whether tourism is an effective alternative livelihood source for the locals of Sukau. Predominantly qualitative research methods were used for this study. These included semi-structured interviews with the local villagers of Sukau, and informal interviews with key informants in the area. Structured questionnaires and interviews were also undertaken with lodges in and near the village. The information gathered from these sources was further strengthened by my own personal and participatory observations. In 2006, 10 per cent of the population of Sukau, and 23 per cent of the estimated total workforce were directly employed in tourism. Results indicate that having tourism as a livelihood option has made the villagers more motivated to protect their environment. Yet the locals of Sukau disagree that their community benefits sufficiently from tourism, and smallholder palm oil farming is viewed as the more lucrative livelihood option. The current financial crisis (2008-9) has complicated the likely contribution of tourism to livelihoods and conservation in the future. Nevertheless it is likely that both the palm oil and tourism industries will recover from the economic downturn, and consequently they will both continue to be future livelihood options for the villagers of Sukau. Therefore steps should be made to improve both industries for the benefit of livelihoods and nature conservation in Sukau. There are a number of potential ways in which tourism could be improved in Sukau to bring more benefits to the locals. If these suggested improvements occur, then the effectiveness of tourism as an alternative livelihood source for the locals of Sukau will be enhanced.