The research explores the potential of herbal tourism as an emerging niche tourism in the rural area of Sabah. It describes the various recreational activities offered by Dai-C Recreation Centre and discusses the issues and challenges faced in developing and promoting herbal tourism in rural sites. Two fieldwork and interviews were conducted at the study site from December 2020 to March 2021. The preliminary findings showed that the availability of vast local herbs, the aesthetic landscape, the dense green forest environment and the pristine atmosphere of the Dai-C Recreation Centre are the key factors attributed to the herbal tourism. Based on the findings, Dai-C Recreation Centre has great potential to be recognized as a distinct herbal tourism destination. In addition, the centre provides activities related to herbal tourism which include herbal garden walk, making herbal drink, tea and soaps, cooking herbal dishes as well as education and interpretation centre that features local herbs medicinal and health values. The potential main market segments include the special interest group and researchers who are interested to explore and learn about herbal plants and tourists who are seeking for relaxation and an escape from busy work life or urban cities. Herbal tourism is not only a tourist attraction, but it also generates a range of economic opportunities, income and employment at the rural site. Key issues and challenges faced in developing herbal tourism relate to financial, labour, environmental and climate changes. Hence, support from local government agencies and tourism promotion boards is crucial in ensuring sustainability of herbal tourism. The research adds to existing literature by contributing to a better understanding of herbal tourism and its economic opportunities and benefits to the rural community.