Nepal is diverse in cultures, religions, languages, and geography. Around 83% of people live in the rural settings of the country. While adapting to local geography, and environment these diverse caste/ethnic groups have developed a unique way of living, and culture, which has become attractive touristic objects in many rural areas of Nepal. The unity and tolerance among these diverse groups is a real identity of Nepal, which is also enhanced through rural tourism. The existing diversity has formed an identity as well as a ground base for rural tourism development. The Bhujung Gaun lies in Gandaki province of Nepal, where homestay began in 1996. This village has a unique scenic view of the Annapurna mountain range. The tourists enjoy the wonderful natural view and unique Gurung culture of Bhujung Gaun. This paper aims to explore how community homestay as rural tourism has been contributing to bringing changes in the study area. This paper also presents the narratives of the local people who have been involved in managing homestay. The narrative informs how has the wave of homestay as a culture reached Lamjung where several touristic villages including Bhujung Gaun. This paper is based on observation and key informant interviews. The livelihood of Gurung community has bought as the impact of rural tourism. Rural tourism has also changed youth attitudes toward their cultural heritage. The locals, those who had migrated out for livelihood opportunities are returning back, which is also interpreted as a positive impact of homestay tourism. Rural tourism has also contributed to preserving intangible cultural heritage as well as maintaining social harmony, preservation and promotion of local Gurung culture and handicraft production, and continuing agricultural practices. This study contributes to refining the community homestay policies in Nepal.