The subject of this thesis is to explore the possibilities and limitations of tourism in transformation of the settlement of Košljun, on the island of Pag, for the purpose of its future development in the field of tourism. The study was conducted by gradual analysis of the island of Pag and Košljun. Analysis of general and geographical features of the island resulted in numerous natural and social attractive resources of the whole island of Pag, including the settlement of Košljun, and they represent the basis for the development of tourism. Conducted analysis of tourist traffic and accommodation facilities on the island of Pag and in Košljun in the last ten years indicated that the island of Pag is in the phase of stagnation in tourism destination life cycle. Such result proves that it is necessary to start the phase of rejuvenation of the destination. Based on the research and previously adopted Spatial Plan of the City of Pag, the draft program for the development of tourism in Košljun for the next 10 years was developed. The draft program is based on the SWOT analysis, consisting of a list of strenghts and weaknesses of the studied destination, and its opportunities and threats. The biggest emphasis of the draft program is on the development of special interest tourism, based on the wealth of natural and human resources of the destination.