A Thesis/Dissertation Submitted in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration in Corporate Management (MBA-CM) of Mzumbe University.The main objective of the study was to empirically investigate the cultural tourism and livelihood of communities along Indian Ocean in Tanzania: the case of Bagamoyo historical town. A conceptual model influencing the extent to which cultural tourism contribute to the livelihood of the local people in Bagamoyo Historical town was developed and tested through a sample survey of 50 respondents in Bagamoyo District, Pwani. The findings reveals that the government institutions i.e. MNRT,the district council (Bagamoyo District Council) officials and different financial institutions has made a lot of efforts about 80% to make sure that local households in Bagamoyo district benefit from tourism sector in order to improve their livelihoods. These institutions has put more efforts on providing education and trainings on the importance of tourism activities and on how to conserve and develop different attractive features, also these institutions as provided loans to local indigenous in order to make sure that they get supports for creating different infrastructures such as hotels and lodges that are important for tourism sector development as well as livelihood development. The implications from the research findings is that in tourism sector, most of the households in Bagamoyo district benefit a lot as a result their livelihoods has been improved through engaging in tourism based activities. Also tourism sector has led to the improvement of other economic sectors such as business sector, infrastructures, fishing, employment and agricultural sector. . Also in the researchers recommendations have been divided into three categories; tourism institution, Financial Institution and Bagamoyo District council; The NGOs should invest in good hiring procedures, standardize the service performance throughout the organization, to the government, in this world of accelerating changes and competitive market the issue of quality service is unavoidable, it is advisable that even the government parastatals or corporations or agency should invest much on the Tourism sector so as to improve the livelihood of the communities in Bagamoyo District.