Since around 2000, tourism has gradually become a key activity reinforcing the Japanese economy. In particular, there has been growth in urban tourism and many urban spaces have been transformed to meet visitors’ needs, a process that has occurred not only in the large metropolises but also in small and medium-sized regional cities. This chapter explores how urban tourism spaces in Japan have been created alongside more general urban development, examining significant aspects and implications of the urban tourism development process. It reveals that the growth of urban tourism has accelerated the growth of local residents’ awareness and activities. Local residents have become more conscious about their living areas and have undertaken spontaneous activities to manage the areas whereas previously there had been a constant struggle and negotiation with the contradiction between urban developments and economic depression. It concludes that citizen participation in the urban tourism development process can be extended into a collaborative area management.