Paper presents the results of research that explored the perception of the local population of the island of Rab on cultural heritage and on the perception of tourist identity of the island. Through review and critical analysis of the demographic situation of the island, valorization of cultural heritage and touristic potential of the island, it was found that Rab has a very high potential for cultural tourism development, while at the same time culture and cultural heritage is not beeing used or evaluated. This paper provides a proposal for institution development that will evaluate culture and cultural heritage and at the same time involve and educate local community. The paper also deals with critical reflection of cultural heritage and its preservation in order to understand of the concept of ecomuseum. Ecomuseum is a concept that actively involves community in its activities, and it sets the community as the main stakeholders in the process. It is porposed that the concept of ecomuseum should develop on unregistered ethnographic collection that allready exists. This cultural institution concept should bring positive changes in community and in its relation to culture and cultural heritage, with ultimate goal of moving towards cultural tourism.