Rural tourism has been proved as an effective approach in many rural areas in China, and during the development processes, local institutions play significant roles in the context of China. This paper is to explore various roles of local institutions in the development of rural tourism in a typical community, Dazhai, in Guilin City. Within its limitations, it examines the roles by identifying the current situations of the community, formal and informal institutions that affect the rural tourism development.Obstacles still exist because of the “top-bottom”political system.