The importance of development of tourism for the overall development of the country has been well recognised. Many efforts, in terms of higher allocation, development of infrastructure, etc have been made to attract tourists. But it seems that the policy makers and implementing agencies have not recognised the importance of provision of sanitation facility at tourist places. Sanitation at tourist places has been remained as a major constraint in development of tourism in India. In this context, the paper aims at analyzing the status of sanitation and its impact on tourism sector, based on 600 sample tourists spread across 12 selected tourist places in Karnataka. It is found that the selected tourist places (except Dharmasthala) have inadequate sanitation facilities, such as toilet, dust bins, drainages, etc. Dumping of plastic waste, including water bottles, food packages, and cups, etc have further deteriorated the sanitation status in tourist places. Inadequate sanitation resulted in illness of tourists and revenue loss to tourism sector. It is estimated that total cost of inadequate sanitation, including cost of illness of tourists and revenue loss to tourism sector, was Rs. 3063 crores i.e. 0.30 per cent of the total gross state domestic product (GSDP) of the state (2015-16). It is expected that the findings of the paper would help in raising the level of awareness about the importance of sanitation among policy makers and implementing agencies and help in reaping full benefits of tourism in the state.