This study aims to present the potential for sustainable tourism development on Vlasina Lake, which is, along with its surroundings, declared as a Ramsar site, Natural Asset of Exceptional Importance, IBA, IPA, PBA and Emerald area. A survey conducted among the residents indicated that they expressed positive attitudes towards sustainable tourism development, even though a small percentage of them are employed in tourism. Considering the lake as the most valuable part of this area, this study emphasized water quality assessment as the necessary condition for sustainable tourism development. Water quality indices (SWQI, CWQI and WPI) were used for water quality assessment for the period 2013–2022. Based on SWQI, Vlasina Lake has a good to excellent water quality and, according to WPI, has clean water suitable for tourism and recreation. The CWQI for overall water quality ranged from marginal to good. It is the highest for recreation, but it is based on only one parameter (pH), which is the limitation of this methodology. Based on field research, survey, water quality assessment and previous studies, it is concluded that this area has favorable conditions for developing various types of tourism, which could contribute to the future development of this undeveloped and unpopulated area.