Creativity and innovation are often associated with big metropolitan cities because the potentia lof creative industries and creative class is concentrated in cities. This study aims to explore the potential of Creative Tourism in small cities and rural areas in the Dalarna region, Sweden and explores the challenges of the municipalities and local creative actors in implementing Creative Tourism in the Dalarna region. Dalarna in Sweden has a rich cultural heritage with a well-developed creative industry, but it is not seen as well integrated with the wider tourism destination mix. For this purpose, a qualitative methodology is used to carry out the research. Data was collected from secondary sources like websites, google scholar, DMO (Destination Management Organisation) followed by semi structured interviews with the local creative actors, municipalities and DMOs. A snowball sampling method was used for the convenience of getting participants for interviews. This study analyzes how Creative activities can be applied to cultural tourism for small cities and rural areas in Dalarna to fully utilize their creative and cultural heritage potential and the challenges associated in developing the creative activities for tourism purposes.