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The objective of the study was to investigate the challenges and opportunities for domestic tourism development in Tanzania and to determine the degree to which Tanzanians are satisfied with the current state of leisure, recreation and tourism facilities. Descriptive research design was used based on a sample frame of 5,000,000. A sample size of 275 respondents was considered for the study. Unit of analysis comprised of Dar es Salaam residents, Tourism stakeholders. Cluster sampling method was used to collect the data whereby questionnaires were issued to respondents through purpose approach. Data was analyzed and presented through tables of data, diagrams and charts. Tanzanian domestic tourism is rather unexplored and as such a lot of opportunities exist, however a lot of resources are needed to exploit these opportunities. International development agencies and communities who are the core source of development capital in many developing countries like Tanzania tend to be keener in funding tourism projects that are directly beneficial to the international tourists because they do not consider domestic tourism in developing countries as being viable.