Tourism has become one of the largest industries in the world, both regarding generated revenues and the amount of people employed. The local inhabitants are considered to be the ones most affected by the tourism development in their area, both positively and negatively, as they spend the most time there. However, their opinions and perspectives are not always regarded as the most important ones if the tourism is generating economic revenues. This study aims to analyze how the increasing tourism is affecting the development of the city center of Reykjavík, the capital city of Iceland, and what effects this can have on the local inhabitants. The data have been collected using triangulation of both qualitative and quantitative methods: personal interviews with professional individuals connected to the tourism development, online survey with the inhabitants of Reykjavík, and a document study of Reykjavík’s comprehensive plan. The results were thereafter analyzed and compared with previous research within the field.