Overtourism is a critical issue for many popular tourist destinations around the world, particularly those with limited spatial and ecological capacity. This paper examines the cases of Mykonos and Santorini, two globally renowned Greek islands experiencing intense seasonal overcrowding. Drawing on secondary data from official sources such as the Bank of Greece, ELSTAT, and Fraport Greece, the study analyzes key causes of overtourism, including cruise traffic, unregulated short-term rentals, and inadequate infrastructure. The findings reveal that although tourism provides significant economic benefits, it also leads to environmental degradation, housing shortages, and a decline in residents’ quality of life. The paper concludes with a set of policy recommendations aimed at promoting sustainable tourism management through regulatory reform, infrastructure investment, and stakeholder collaboration. The goal is to offer a balanced model that ensures long-term viability for both the tourism industry and local communities.