In recent year, tourism activities has undergone a continuous and marked change in Malaysia. Tourism activities become popular among the local people and foreign people. The growth of tourism activities can be described as the growth of the mushrooms after the rain. The positive acceptance from the tourists encouraged many foreign investors to develop more tourism activities in Malaysia. The economic development in Malaysia can be affect by the tourism activities. This research has been conducted to identify the impact of tourism activities towards economic development in Terengganu. A set of questionnaire has been use as a collecting data method and distributed to 300 respondents among local people, accommodation and service providers, local government and federal government in Terengganu included Perhentian Island, Kuala Terengganu, Dungun and Kerteh. The data was analyzed by using Statistical Packages for Special Science (SPSS) software. As an overall finding, the survey found that tourism activities gives moderate effect to economic development in Terengganu. As a conclusion, the tourism activities gives moderated effect to economic development in Terengganu through water activities, sightseeing and shopping