There is a long-held belief that tourism can be a passport to development and can also alleviate poverty. Although international tourism has grown markedly since the 1950s, the promised benefits of tourism and its potential to reduce poverty has come under question. This chapter reviews the definitions of poverty, noting both absolute and relative measurements; single indices and multidimensional criteria. The chapter then assesses, from a macroeconomic perspective, the extent to which tourism can contribute to poverty reduction. The overwhelming conclusion is that tourism can indeed improve the lives of residents of destination areas but that equality may have to be sacrificed for growth. Who benefits from tourism depends on the type of tourism involved, the prevailing wider environment at the destination and the ability and commitment of governments to extend tourism’s benefits as widely as possible. Lastly, the chapter discusses the mechanisms of how poverty can be alleviated through tourism. Directions of future research are suggested.