Himachal Pradesh, located in Himalaya, India, is planning large-scale mountain tourism challenging the optimum usage of environmental resources. This manuscript employs the system approach and Total Interpretative Structural Modeling (TISM) to discuss the main challenges and solutions to more sustainable mountain tourism planning and development in this region. The study identified ten factors affecting the sustainability of mountain tourism development. Stakeholders’ attitudes, tourists’ demand for sustainability, ethical business conduct, and resource availability drive the tourism industry’s transition toward sustainability. Digitalization, niche tourism development, marketing of the destination, and effective disaster management are essential for long-term resilience and the adaptation of tourism destinations and require system approach and thinking. This unique region is one additional example of tradeoffs between tourism development and the conservation of the natural environment, occurring because local communities’ perception of economic gains outweighs the ecosystem’s negative influences. The study enables tourism authorities determine the industry’s possible adaptive strategies for maintaining mountain tourism sustainability by outlining future actions. The model presented here could be generalized for other mountain destinations by adding or removing destination-specific characteristics.