This study presents an analysis of innovation in the tourism sector of the Commonwealth of Dominica. The implementation of a questionnaire survey across a range of tourism sub-sectors yielded information on the scale of innovation activities, the characteristics of innovation firms and the internal and systemic factors that influence innovation. The key results of the analysis indicate that tourism businesses face a number of critical obstacles to innovation including challenging domestic economic conditions, lack of access to appropriate financing, weak customer demand, high cost of undertaking innovation activities and lack of skilled or qualified personnel. Based on these findings and suggestions put forward by survey respondents for encouraging innovation in the tourism sector, recommendations are offered to the Government of Dominica. The core recommendation outlined is the integration of an innovation-oriented perspective into the current tourism policy which is guided by six priority action points: (1) Increasing the demand for Dominica's tourism product; (2) Maintaining the nature island image; (3) Improving communication; (4) Removing administrative hurdles; (5) Developing appropriate finance mechanisms and; (6) Valuing innovation. These recommendations, which require both a long-term perspective and commitment of resources, aim to strengthen and stimulate innovation to sustainably enhance the economic performance of tourism in the Commonwealth of Dominica.