Pro-poor tourism is a powerful tool in China’s poverty alleviation strategy, helping the achievement of Sustainable Development Goal 1, no poverty. Thus, the Chinese experience in tourism poverty reduction could be instructive. Considering the dominant role of the government in PPT, this study examines the government’s PPT scheme within a sustainable livelihood framework, uncovering the usefulness of PPT in poverty alleviation. With thematic analysis, 18 cases are systematically coded, and several findings are discovered. Rural development is co-evolutionary with PPT, while livelihood capitals change correspondingly. Specifically, human capital is mentioned as the top priority, followed by economic capital, institutional capital, social capital, and natural capital. Analysis of the cases indicates that livelihood capital comprises multiple themes, and a variety of livelihood strategies are applied conditionally. Additionally, livelihood outcomes are in accord with the criteria of Beautiful Village, characterized by good quality of life. In summary, the success of the PPT in China is a comprehensive project, contributed to by a government-led model, a well-organized community system, effective community participation, and whole-of-society synergy. The study demonstrates that a paradigm shift has been seen in China’s PPT model and sheds light on tourism development in poverty alleviation globally.