Community involvement is regarded as a significant factor for the development of rural tourism. In Malaysia, cooperatives are used as a catalyst to achieve community development through community involvement. This paper focuses on the involvement of the local residents in Lower Kinabatangan, Sabah, Malaysia in tourism through the establishment of a community based cooperative (KOPEL). The literature reveals a low level of community participation specifically in developing countries. Hence, an in-depth analysis of the local residents’ involvement in KOPEL’s tourism activities and its impacts is deemed relevant. This paper examines the extent of participation of the local residents in tourism development by addressing two research questions: how are the local residents involved in the tourism projects and products initiated by KOPEL; what are the impacts of rural tourism on the local residents? A qualitative methodology was employed to address the research questions. Overall, a significant level of involvement in tourism activities is demonstrated by the local residents. The findings are themed into four categories: (1) planning and empowerment, (2) awareness and training, (3) collaboration with other stakeholders and (4) impacts of rural tourism.